Stock futures drop on disappointing earnings, trade tensions

[July 19, 2018]   By Amy Caren Daniel

(Reuters) - Disappointing earnings from eBay and American Express pushed U.S. stock index futures lower on Thursday, while trade tensions rose on news the European Union is preparing to retaliate if United States slaps tariffs on EU cars.

EU Trade Commissioner Cecilia Malmstrom said she hopes a mission to Washington will ease the trade dispute that started after the U.S. imposed tariffs on EU steel and aluminum on June 1, with President Donald Trump threatening to extend them to cars and car parts.

Concerns about the impact of tariffs have been rising among manufacturers in every one of the Federal Reserve's 12 districts, a central bank report released on Wednesday showed.

Shares of AmEx <AXP.N> fell 2.7 percent in thin premarket trading after the credit card company said expenses rose due to higher spending on its rewards program.

EBay <EBAY.O> tumbled 6.9 percent after the e-commerce retailer reported underwhelming results and forecast.

So far, earnings at S&P 500 companies have mostly been encouraging. Of the 48 companies that have reported, 87.5 percent have topped analysts' expectations, according to Thomson Reuters I/B/E/S.

Solid earnings from major financial and industrial companies on Wednesday sent the benchmark index to its highest in more than five months, while the Dow Jones Industrial Average climbed for a fifth session.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 16, 2018. REUTERS/Brendan McDermid

At 7:16 a.m. ET, Dow e-minis <1YMc1> were down 61 points, or 0.24 percent. S&P 500 e-minis <ESc1> were down 7.25 points, or 0.26 percent and Nasdaq 100 e-minis <NQc1> were down 24 points, or 0.32 percent.

Lower crude oil prices also weighed on the markets. Prices fell after official data showed an unexpected rise in U.S. crude stockpiles, U.S. output hit a record high and major oil exporters increased production. [O/R]

Among other stocks, IBM <IBM.N> rose 2.8 percent after its results topped estimates due to growth in its higher-margin businesses including cybersecurity and cloud computing.

Cisco <CSCO.O> rose 1.9 percent on a report that Amazon was not targeting the networking market.

Economic data in tap includes the Labor Department jobless claims report at 8:30 a.m. ET that will likely show initial claims rose to 220,000 last week, from 214,000 in the week before.

(Reporting by Amy Caren Daniel in Bengaluru; Editing by Arun Koyyur)

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