Stock futures little changed to open week

[July 26, 2010]  NEW YORK (AP) -- Stock futures traded in a narrow range Monday as investors put a recent rally on pause and European markets reacted coolly to tests measuring the health of the continent's banking system.

European markets showed little movement as investors had their first chance to react to a series of tests to determine the health of the continent's big banks. Regulators said only seven of the 91 banks tested would struggle if the continent's economy and government debt problems worsened.

U.S. investors had a chance to react to the test results Friday afternoon and sent stocks higher on the results. Because they already had a chance to trade after the news, U.S. investors had little reason to make any big moves to start the week.

A report on new home sales is due out Monday that could help sway traders. It is expected sales edged higher from record lows in June as the housing market recovery remains erratic.

Stocks surged last week as mostly strong corporate earnings and outlooks, as well as the results of the European bank tests, added to hopes that the global economy is recovering. The Dow Jones industrial average jumped 3.2 percent last week, putting it within 4 points of getting back into positive territory for the year.

There are few earnings reports Monday, but plenty throughout the week that could help dictate trading. Results due out Tuesday from oil company BP PLC will likely be closely watched because of reports that embattled CEO Tony Hayward will step down and the company could take a big charge to cover costs of cleaning up the oil spill in the Gulf of Mexico.

Ahead of the opening bell, Dow Jones industrial average futures fell 8, or 0.1 percent, to 10,378. Standard & Poor's 500 index futures fell 1.50, or 0.1 percent, to 1,099.10, while Nasdaq 100 index futures rose 0.50, or less than 0.1 percent, to 1,874.75.

Overseas, Britain's FTSE 100 rose less than 0.1 percent, Germany's DAX index fell 0.2 percent, and France's CAC-40 rose less than 0.1 percent. Japan's Nikkei stock average rose 0.8 percent.

BP shares rose $1, or 2.7 percent, to $37.86 in pre-opening trading.

Investors will get one piece of economic data Monday that could affect trading. The Commerce Department is expected to report that sales of new homes rose 6.7 percent in June to an annual rate of 320,000, according to economists polled by Thomson Reuters. The report is due out at 10 a.m. EDT.

The housing market, which helped push the economy into recession, remains sluggish. There was a sharp drop in sales after a government tax credit for home buyers expired at the end of April. There has been concern that the market was being propped up by that credit and it will continue to struggle to recover now that there are fewer incentives for buyers.

Any improvement in new home sales could provide some relief to investors because May's figures fell to the lowest level since records began being kept in 1963. A smaller than expected drop in sales of previously occupied homes added to stocks rally Thursday.

There are plenty of additional economic reports due out later in the week that could help shape trading. They all lead up to Friday's first reading on second-quarter domestic gross product, the broadest measure of economic growth.

GDP measures the collective output of the entire economy. The second-quarter report is expected to show just modest growth after stronger growth earlier in the year. The slowdown is forecast because of the withdrawal of government stimulus measures that had helped boost expansion throughout the economy.

Bond prices inched higher Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.99 percent from 3.00 percent late Friday.

[Associated Press; By STEPHEN BERNARD]

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