US STOCKS-Futures point to lower open after weak ADP report

Published 10/06/2010, 09:11 AM
Updated 10/06/2010, 09:12 AM

* ADP report shows unexpected cut in private payrolls

* Costco sales a worry, Yum Brands warns on margins

* Futures: Dow off 5 pts, S&P up 1.4, Nasdaq down 2.75

(Updates with ADP data)

By Ryan Vlastelica

NEW YORK, Oct 6 (Reuters) - U.S. stock index futures pointed to a lower open on Wednesday as an unexpectedly poor reading on private-sector hiring added to caution ahead of a critical non-farm payroll report later in the week.

Private employers cut 39,000 jobs in September, according to the ADP Employer Services report, the largest monthly loss since January and a disappointment to analysts who had forecast 24,000 private payroll additions.

"There were cuts in manufacturing, which has been an area of some strength, so that's a significant disappointment," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland. "This makes me more cautious about Friday, but with quantitative easing as an ace in the hole, we could win either way."

Costco Wholesale Corp posted lower-than-expected comparable sales in September, pressuring shares even as its quarterly profit beat expectations.

Yum Brands Inc said sales growth sped up at its KFC and Pizza Hut restaurants in China but warned that higher labor costs there and rising commodities prices would hit margins.

Constellation Brands Inc reported adjusted second-quarter earnings that fell from the prior year.

S&P 500 futures rose 1.4 points and were slightly 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 5 points and Nasdaq 100 futures slid 2.75 points.

Dow component Johnson & Johnson Inc on Wednesday said Crucell will recommend that shareholders accept J&J's $2.4 billion takeover bid for the Dutch biotech company.

Japan's Nikkei average surged 1.8 percent to close at a two-month high as investors continued to welcome the Bank of Japan's surprise interest rate cut the day before, while European shares were up 0.8 percent on hopes of further monetary stimulus.

U.S. stocks rallied to near a five-month high on Tuesday on growing conviction central banks will do even more to bolster struggling economies worldwide.

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