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US STOCKS-Index futures drop after Cisco outlook, G20 eyed

Published 11/11/2010, 07:47 AM
Updated 11/11/2010, 07:52 AM
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* Cisco shares hit after outlook

* Commodity prices rebound

* Futures off: S&P 6.2 pts, Dow 43 pts, Nasdaq 14.5 pts

By Edward Krudy

NEW YORK, Nov 11 (Reuters) - U.S. stock index futures fell on Thursday after a dismal outlook from Cisco Systems, while leaders struggled to find common ground at the G20 summit amid concerns growing protectionism will hurt global trade.

* Cisco Systems Inc's revenue forecasts fell far short of expectations, a blow at the end of a stronger-than-expected earnings season, underscoring the risks a still-weak economy poses to corporate profits. Cisco shares fell nearly 16.3 percent to $20.49 in premarket trading.

* "Cisco is pushing the tech component down in premarket trade," said Peter Cardillo, chief market economist at Avalon Partners. "Obviously it is weighing on the market."

* Group of 20 leaders tried to agree on meaningful action to rebuild the global economy as a crisis erupted in Ireland, pushing bond spreads out to a record over Germany, and infecting Spain and Portugal.

* Tensions on the European periphery weighed on the euro, which fell 0.5 percent against the dollar. U.S. equities have shown a strong correlation to the euro in recent weeks, trading in the same direction as the single currency.

* Investors are worried that criticism over the Federal Reserve's asset purchases has escalated into a currency war as countries try to secure the competitiveness of their exports by manipulating their currencies lower.

* S&P 500 futures declined 6.2 points and were 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 43 points, and Nasdaq 100 futures dipped 14.5 points.

* The stock market has stalled this week after a run-up in stock prices over the last two months that has driven up the S&P 500 more than 16 percent. Equities have been volatile in the absence of catalysts to drive the market, often taking their cue from the currency market.

* Trading volume could be light as U.S. government offices and the bond market are closed for the U.S. Veterans Day holiday.

* Shares in Freeport-McMoRan Copper & Gold Inc rose 1 percent to $105.41 in premarket trade as commodity prices rebounded.

* Copper hit a record high, while oil reached a 25-month high as strong industrial output sent demand in China to a record and a surplus subsided in top consumer the United States.

* Investors will scrutinize earnings report. Walt Disney Co, Kohl's Corp, NVIDIA Corp and Viacom Inc are all due to report quarterly earnings.

* European shares slipped 0.2 percent Thursday morning on renewed worries about euro zone debt levels and Cisco's outlook.

* U.S. stocks advanced Wednesday as investors put the previous day's uncertainty aside and snapped up some of the week's biggest losers in renewed optimism the rally remained intact.

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