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US stock futures down as debt standoff continues

US stock futures fell Friday as traders await a resolution to the impasse over the US debt limit and weigh a mixed bag of corporate earnings reports

AP, Friday 22 Jul 2011
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Republicans and Democrats are far apart on a deal to raise the US debt ceiling before August 2, when the country could default on its financial obligations for the first time. That uncertainty has overshadowed an agreement in Europe Thursday to prop up Greece with a second financial lifeline.

Ahead of the opening bell, Standard and amp; Poor's 500 futures fell 2 points, or 0.1 per cent, to 1,341. Dow Jones industrial average futures declined 24, or 0.2 per cent, to 12,666. Nasdaq 100 futures lost 9, or 0.4 per cent, to 2,402.

President Barack Obama and Republican House Speaker John Boehner on Thursday continued to search for an ambitious $4 trillion grand bargain that would combine cuts to popular social programs revenue increases through a broad overhaul of the tax code.

They remained apart on key issues, including the amount of revenue that a revamped tax code could yield, the nature of the changes to Medicare and Medicaid and the process that would guarantee that both taxes and benefit programs would in fact be overhauled.

Talks in Europe Thursday were more productive, with officials agreeing to a rescue package for Greece worth about $155 billion. They also decided to lower interest rates and lengthen payback terms for loans to Greece, Ireland and Portugal.

The deal resolves a political deadlock among European economic authorities about how to address Greece's looming problems before they spread to other indebted nations and countries whose banks held bonds sold by the Greek government.

Meanwhile, major US equity futures reacted strongly to a string of reports about how companies fared in the second quarter.

On the positive side, Advanced Micro Devices Inc. shares leaped 9 per cent in premarket dealing after the company's strong second-quarter results gave traders confidence that it has found direction after unexpectedly ousting its CEO six months ago. The stock had fallen by 30 per cent since CEO Dirk Meyer was ousted in January. The results reflected early success for a new chip that combines general-purpose and graphics capabilities.

McDonald's Corp. shares rose 2 per cent ahead of the market opening after the company said strong sales in Europe helped lift its net income and revenue past analysts' expectations. CEO Jim Skinner said the company's affordability helped it as the economic recovery stumbled.


Oil services company Schlumberger Ltd. rose 3 per cent in premarket trading after the company said growth in North American drilling juiced its profits in the second quarter.

The company reported earnings of 98 cents per share, beating the 85 cents analysts expected.

General Electric Co. shares rose 2 per cent ahead of the opening after the company said stronger performance by its finance unit helped push earnings past Wall Street's expectations.

Among the laggards, Caterpillar Inc. fell 6 per cent after the company's second-quarter profit rose less than Wall Street analysts expected.

Verizon Communications Inc. futures lost a per cent, despite reporting net income in the second quarter that was slightly higher than analysts expected. The company said that Chief Operating Officer Lowell McAdam will take over from long-time CEO Ivan Seidenberg on Aug. 1. The company has signaled the succession for the past year.

Medical device maker C.R. Bard's shares plummeted 8 per cent after the company said it took a $300 million charge in the second quarter to settle lawsuits stemming from defective devices implanted in hernia patients. That led Fitch to put the company's debt on notice for a possible downgrade.

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