US STOCKS-Futures fall amid U.S. debt limit, profit worries

Tue Jan 15, 2013 1:09pm GMT

Quotes

   

* Debt ceiling debate, earnings season worries hit futures

* Retail sales, manufacturing, producer prices data on tap

* Futures down: S&P 6.5 pts, Dow 31 pts, Nasdaq 9.25 pts

By Leah Schnurr

NEW YORK, Jan 15 (Reuters) - U.S. stock index futures slipped on Tuesday as investors fretted over the debate brewing in Washington over raising the U.S. borrowing limit as well as what is expected to be a lackluster earnings season.

Economic reports include U.S. retail sales and producer prices for December as well as manufacturing activity in New York state for January, all due at 8:30 a.m. (1330 GMT). Business inventories for November will be released at 10 a.m.

On Monday, President Barack Obama rejected any negotiations with Republicans over raising the U.S. debt ceiling. The United States could default on its debt if Congress does not increase the borrowing limit.

Resolving the debt ceiling debate is more a question of how than if. Investors are wary of another last-minute agreement like the one in August 2011, said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

"Of course people expect the government will not default on its debt ... but there could be damage done in how it's resolved," said Meckler. "A long, dragged out fight over this damages the credibility of the government and can weaken the global market for U.S. debt."

Speaking separately on Monday, Federal Reserve Chairman Ben Bernanke urged lawmakers to raise the debt ceiling. The central bank chairman also gave a cautiously optimistic outlook for U.S. growth but no clear hints on when the Fed would curb its aggressive bond purchases.

Corporate earnings season picks up the pace this week and investors are bracing for disappointment. Analyst estimates for the quarter have fallen sharply since October. S&P 500 earnings growth is now seen up just 1.9 percent from a year ago, Thomson Reuters data showed.

Homebuilder Lennar on Tuesday reported profit that beat expectations amid a jump in new home orders. The stock edged down 0.9 percent to $40.66 in premarket trading.

S&P 500 futures fell 6.5 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures were down 31 points, and Nasdaq 100 futures lost 9.25 points.

Shares of Dell rose 3.7 percent to $12.75 in premarket trade the day after sources said the company is in talks with private equity firms on a potential buyout.

Facebook added 1.2 percent to $31.32 ahead of a major news event at its headquarters. The secretive nature of the event has triggered a guessing game about what the company could unveil.

ConocoPhillips said it would sell its properties in the Cedar Creek Anticline in Montana and North Dakota to Denbury Resources Inc for $1.05 billion in cash.

QLogic, the networking products maker, surged 7.1 percent to $10.90 after it gave a third-quarter outlook.

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