Stock futures point to drop to start week

[October 18, 2010]  NEW YORK (AP) -- Traders sold stock futures Monday ahead of a busy week of earnings that should provide clues about whether corporate profits are suffering from sluggish economic growth.

Broad economic reports have dictated trading in recent months, driving stocks almost in unison. However, this week individual stock movements could become prevalent again because there are dozens of big companies reporting earnings and only a few economic reports.

Economic growth has slowed throughout the year, leaving traders unsure about the pace of recovery. But companies have largely not been hurt by a slowdown yet. They greatly improved operating efficiencies during the recession, which should continue to help them generate relatively strong results.

Citigroup Inc., IBM Corp. and Apple Inc. all release results Monday.

Citigroup's report should indicate if borrowers are in a better position to repay loans. Failed loans still remain a big problem for banks. They demonstrate consumers are still struggling with high unemployment.

IBM's results, meanwhile, should show if companies are spending more to upgrade technology and computers. Signs that companies are ramping up technology spending would be a good indication that they expect business to pick up in the coming quarters. It also further adds to efficiencies that can improve profitability.

Apple's results should show how much of an appetite consumers have for new gadgets. The iPod and iPad have been incredibly popular during the year even as many shoppers cut back elsewhere.

Ahead of the opening bell, Dow Jones industrial average futures fell 34, or 0.3 percent, to 10,990. Standard & Poor's 500 index futures fell 3.40, or 0.3 percent, to 1,171.50, while Nasdaq 100 index futures fell 2.75, or 0.1 percent, to 2,092.25.

Citigroup shares rose 6 cents to $4.01 in pre-opening trading. Apple shares rose $1.26 to $316.00. Apple shares surged above the $300 level for the first time last week.

Bond prices rose slightly. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.54 percent from 2.57 percent late Friday. Its yield is often used as a benchmark to set interest rates on mortgages and other loans.

Traders that prefer to look at economic reports will turn their attention to data that is expected to show modest growth in industrial production last month. Economists polled by Thomson Reuters predict industrial production increased 0.2 percent in September. The report is out at 9:15 a.m. Monday.

[Associated Press; By STEPHEN BERNARD]

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