Dow points lower on Spanish debt concerns, Ford, Amazon in focus
U.S. equity markets looked set to open lower Friday as a positive week could end with renewed concerns about European debt, a slowing U.S. economy and the strength of U.S. earnings.
In pre-market trading, the Dow Jones Industrial Average fell 2 points to 13,158.22, the S&P 500 fell 1.3 points to 1,395.50 while the Nasdaq gained 3.5 points to 2,723.75.
Thursday US markets ended in the green with the Dow up 0.87%, the S&P 500 was 0.67% higher and the Nasdaq ended the session up 0.69%.
Late Thursday S&P announced that it was downgrading Spain's credit rating from "A" to "BBB+" citing numerous drags on growth, and an ailing banking sector that might require further government support.
The downgrade places Spanish debt only three steps above junk bond status.
In corporate news, automaker Ford (NYSE:F) is expected to post a 44% drop in earnings to 35 cents a share despite having better sales, partly due to greater losses expected in Europe.
Amazon (NASDAQ:AMZN) reported first-quarter earnings of $130 million, or 28 cents per share, well above the 6 cents per share expected by analysts polled by FactSet Research. Revenue also topped forecasts.
Starbucks (NASDAQ:SBUX) late Thursday that same-store sales in the second quarter rose 7%, falling below Wall Street’s target of 7.7%. The company said profit rose 18% to $309.8 million, while revenue rose 15% to $3.2 billion.
Analysts also predict lower earnings at Procter & Gamble (NYSE:PG), where earnings of 93 cents per share are forecast. Merck (NYSE:MRK) earnings are expected to rise to 98 cents per share.
Analysts surveyed by Thomson Reuters are expecting oil major Chevron (NYSE:CVX) to report improved earnings of $3.26 per share, on 20% increase in revenue due to higher oil prices.
Online travel service Expedia (NASDAQ:EXPE) late Thursday reported first-quarter adjusted earnings of 26 cents per share on a 12% increase in revenue to $816.5 million. Analysts had forecast a profit of 15 cents per share on sales of $792.3 million.
On the economic front, first-quarter GDP growth will be released at 8:30 am. EDT. Economists expect to see a slowdown from the fourth quarter of 2011 and worry the drop will signal a "new normal" of sluggish growth.
The Labor Department's quarterly employment cost index, which shows changes in the labor costs for firms, will also be released at the same time. Economists predict costs increased 0.5%, inching up from 0.4% in 2011's fourth quarter.
April's final reading of the University of Michigan Consumer Sentiment Index is due later Friday morning with economists predicting the index will hit 76.1, slightly higher than the initial April reading and nearly the same as March.
In NYMEX futures trading, oil for June delivery lost 33 cents to $104.22 a barrel while gold futures for June delivery $5.80 to $1,654.70 an ounce.
European stocks were higher in morning trading despite the Spanish ratings downgrade. The FTSE 100, DAX and CAC 40 were all up around 0.3%.