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Futures Trade Flat; Big Earnings Week Ahead

CNBC.com and Reuters
Monday, 24 Jan 2011 | 9:22 AM ET

U.S. stock futures traded flat to slightly higher at the start of a week featuring dozens of major earnings reports, as well as a Federal Reserve statement and a slew of macroeconomic data.

Stocks ended mixed last week, as the performance of technology stocks dragged down the Nasdaq.
The earnings began before-the-bell, with Dow component McDonald's falling in pre-market trading despite reporting earnings of $1.16 a share, in line with expectations, and above the $1.03 a share posted a year earlier. McDonald's sales results were better than expected, rising to $6.21 billion from $5.97 billion last year. The fast food chain was expected to earn about $6.20 billion, according to the consensus of analysts surveyed by Thomson Reuters.

And Halliburton shares also slipped despite reporting better-than-expected profits and sales. Rival Schlumberger was flat after reporting strong results on Friday.

Fellow Dow component American Express reports earnings after the bell, along with CSX , Amgen and Texas Instruments .

On Friday, CNBC parent posted a better-than-expected profit, helped by strong emerging-market demand for heavy equipment, boosting the market and sparking optimism the economy was strengthening.

Shares of the world's largest maker of jet engines and electric turbines rose 7 percent on Friday, hitting their highest level since November 2008, and making GE the biggest lift to the Dow Jones industrial average.

Philips Electronics, which competes with General Electric in some businesses, warned on Monday however that consumers in mature markets would be reluctant to spend this year. The group blamed weak TV sales for disappointing fourth-quarter profit.

JCPenney rose after news it was closing some stores, outlets and call center locations to streamline operations and boost profits, and that Steven Roth, chairman of Vornado Realty Trust William Ackman, the activist investors, are joining the board.

RockTenn has agreed to buy rival Smurfit-Stone Container for $3.5 billion in cash and stock seven months after Smurfit emerged from bankruptcy with less debt and higher profit potential. The combined company would be the second largest container board producer after International Paper . The merger was approved by the boards of both companies.

With no macroeconomic data scheduled for Monday, investors will look ahead to the Federal Reserve’s meeting Tuesday and Wednesday, and several measures of the housing market, including the S&P Case Shiller Home Price Index on Tuesday and new home sales figures on Wednesday.

The Fed was not expected to take any action at its two-day meeting, but it could comment on the economy and inflation outlook. Later this week, the focus will shift to reports on consumer sentiment and fourth quarter gross domestic product.

Upbeat on US Earnings Season
David Buik, partner at BGC Partners, expects solid earnings out of the U.S. this week. He tells CNBC's Chloe Cho and Anna Edwards that this will lend support to global equities over the next few days.

Also, President Obama gives his State of the Union address Tuesday. Obama has signaled he will call for efforts to tackle the problem of high annual US deficits and surging debt in his nationally televized annual address.

In the bond markets, U.S. Treasury will be auctioning $35 billion in 2-year notes, $35 billion in 5-year notes, and $29 billion in 7-year notes Tuesday through Thursday.

Shares were down in Europe Monday morning as investors remain nervous as the debt crisis continues to take its toll and after Philips' warning.

French Finance Minister Christine Lagarde told CNBC on MondayEuropean banks will have to undergo another round of stress tests which will be far more strict and credible, needed to restore credibility.

In Ireland, the political fallout from the country’s financial meltdown continued and early elections were looming after the Green Party pulled out of the government led by Prime Minister Brian Cowen.

Cowen ruled out resigning as prime minister, but did resign Saturday as leader of Ireland's political heavyweight, the Fianna Fail party.

On the Calendar Next Week:

MONDAY: Before-the-bell earnings from McDonald's, Halliburton; after-the-bell earnings from American Express, Amgen, CSX, and Zions Bancorp.
TUESDAY: President Obama's State of the Union address; S&P Case Shiller Home Price Index, consumer confidence, Richard Fed business activity survey, state-by-state unemployment, two-year Treasury note auction, API weekly report; Bank of Japan monetary policy meeting; before-the-bell earnings from Johnson & Johnson, 3M, Travelers, Verizon and US Steel; after-the-bell earnings from Yahoo!
WEDNESDAY: Davos/World Economic Forum; mortgage applications, new home sales, oil inventories, five-year Treasury note auction, FOMC announcement; earnings before-the-bell from Boeing, United Technologies, Xerox; earnings after-the-bell from Netflix.
THURSDAY: Durable goods, jobless claims, pending home sales, natural gas inventories, seven-year Treasury note auction, money supply; before-the-bell earnings from AT&T, Caterpillar, and Colgate-Palmolive; after-the-bell earnings from Microsoft.
FRIDAY: GDP (first reading), consumer sentiment; NBCU/Comcast deal closes; before-the-bell earnings from Chevron and Honeywell.

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