Stock futures flat as trade fears counter strong earnings

[August 08, 2018]  By Amy Caren Daniel

(Reuters) - U.S. stock index futures were flat on Wednesday, as escalating trade tensions between the United States and China overshadowed a strong showing for corporate earnings.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 24, 2018. REUTERS/Brendan McDermid

Washington is set to begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23, to which China has vowed to retaliate to an equal degree.

The latest tariffs will hit semiconductors from China, even though many of the basic chips in these products originate from the United States, Taiwan or South Korea.

Markets have largely shrugged off trade issues as indicated by the S&P 500's <.SPX> recent rise.

The index is just 1 percent shy of a record it hit on Jan. 26 as an estimated 24 percent jump in earnings from S&P companies testified to the strength of the world's biggest economy and corporate sector.

Futures implied the index would open up at 2,860.7, about 12 points away from the record.

A sharp rally in tech and consumer discretionary stocks has already helped the Nasdaq recover much faster than the broader markets from a sell-off in February, hitting a record high late last month.

At 7:16 a.m. ET, Dow e-minis <1YMc1> were up 18 points, or 0.07 percent. S&P 500 e-minis <ESc1> were up 1.25 points, or 0.04 percent and Nasdaq 100 e-minis <NQc1> were up 3.25 points, or 0.04 percent.

With the second-quarter earnings season winding down, 79 percent of S&P 500 companies have topped estimates. If the beat rate holds, it will be the highest on record, dating back to the first quarter of 1994, according to Thomson Reuters I/B/E/S.

CVS Health <CVS.N> rose 1.3 percent in premarket trading after the drugstore retailer beat analysts' estimates for adjusted quarterly profit as it sold more prescription drugs at its stores.

Michael Kors <KORS.N> gained 4.4 percent after the fashion house topped Wall Street forecasts for quarterly profit and revenue and raised its full-year earnings forecast.

Walt Disney <DIS.N> fell 0.8 percent after its quarterly profit missed estimates as new technology costs rose.

Cimarex Energy <XEC.N> fell more than 7 percent after posting disappointing quarterly results.

(Reporting by Amy Caren Daniel in Bengaluru; Editing by Anil D'Silva)

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