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US STOCKS-Futures drop on China cash fears, European banks
October 23, 2013 / 12:16 PM / in 4 years

US STOCKS-Futures drop on China cash fears, European banks

* PBOC may tighten cash supply to address inflation risks

* Corning jumps, Samsung unit may become largest shareholder

* Caterpillar falls after results, Boeing up

* Futures off: Dow 74 pts, S&P 8 pts, Nasdaq 21 pts

By Rodrigo Campos

NEW YORK, Oct 23 (Reuters) - U.S. stock index futures fell on Wednesday, following four straight days of record highs on the S&P 500, amid concern over tightening financial conditions in China and weakness in European banks.

Shares of Dow component Caterpillar Inc fell 3.6 percent in premarket trading after the mining and construction equipment company posted a lower-than-expected quarterly profit and cut its full-year forecast again.

Boeing Co reported a rise in adjusted profit in the third quarter on Wednesday, and raised its full-year forecast, reflecting booming commercial aircraft production. The company's shares rose 3.8 percent in premarket trading.

China's primary short-term money rates rose after a policy adviser to the People's Bank of China said the PBOC may tighten its cash supply to address inflation risks, a move that could hurt growth in the world's second-largest economy.

The European Central Bank said it will put top euro zone banks through rigorous tests next year to build confidence in the sector. However, some analysts say if the review reveals unexpectedly large problems, it could backfire by undermining the confidence it aims to bolster.

"Stocks are vulnerable at this levels and it doesn't take much of a push, whether it is weak Asian markets, a weak banking sector in Europe or a cloudy earnings picture, to have things roll over," said Art Hogan, managing director at Lazard Capital Markets in New York.

"We got to all-time highs and investors got a bit of vertigo."

S&P 500 futures fell 8 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 fell 74 points and Nasdaq 100 futures lost 21 points.

A unit of Samsung Electronics could become the biggest shareholder of Corning Inc, the maker of scratch-resistant Gorilla Glass used in many mobile gadgets. Corning shares jumped 23 percent in premarket trading.

Broadcom, programmable chipmaker Altera and radio frequency chipmaker RF Micro Devices on Tuesday joined Intel and Texas Instruments on a list of semiconductor companies that have unveiled underwhelming quarterly forecasts over the past week.

Broadcom shares fell 7.9 percent in premarket trading, Altera fell 6.2 percent and RF Micro lost 5.8 percent.

Shares of Cree Inc fell 15.6 percent premarket after the maker of light-emitting diodes forecast current-quarter earnings below analysts' estimates.

According to Thomson Reuters data through Tuesday morning, of 128 companies in the S&P 500 that had reported earnings, 63.3 percent have topped analysts' expectations, in line with the beat rate since 1994 but below the 66 percent rate over the past four quarters.

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