Futures Drift Lower Ahead of the Employment Repot. Stocks to Watch: BAC, BP, CPB, FCX, HPQ, TTWO, and GRA

Published on Friday, 03 September 2010 08:18 Written by Christopher Lynn

New York, September 3^rd (TradersHuddle.com) – Stock futures drifted lower ahead of the latest U.S. employment report, which will provide a picture of the health of the economic recovery in the largest economy in the world.

The Labor Department is schedule to release its August report on non-farm payrolls at 8:30 am, with economists expecting a decline of 100,000. The decline would mark the third straight month of losses, caused in part by the loss of temporary census hiring. Private payrolls are seen rising by 41,000 after a stronger performance in July. Little change is seen in the unemployment rate, despite the rising nonfarm payrolls, due to the effect of discouraged workers leaving the job market.

On other economic news, the Institute for Supply Management's non-manufacturing survey is released at 10 am. The survey of services activity is expected to show a slight decline for August

Today’s stocks to watch: Bank of America (NYSE:BAC), BP (NYSE:BP), Campbell Soup (NYSE:CPB), Freeport McMoRan (NYSE:FCX), Hewlett-Packard (NYSE:HPQ), Take-Two Interactive Software (NASDAQ:TTWO), and W.R. Grace (NYSE:GRA)

Bank of America (NYSE:BAC), the largest U.S. lender, was slightly lower in pre-market trading, as it will likely see increased volatility during the session, along with the financial sector, as investors react to the latest employment report. Bank of America in particular has increased exposure to the U.S. economy and consumer.

BP (NYSE:BP), the London based embattled energy giant, fell 0.52% in pre-market as crude oil headed for a weekly decline ahead of the latest U.S. employment report. BP also reported that costs associated with its response to its Gulf of Mexico spill, the worst in U.S. history reached $8 billion. BP removed the capping stack on top of the Deepwater Horizon blowout preventer yesterday after plugging the well with cement last month. The company needs to recover the blowout preventer, as federal investigators have subpoenaed it after it failed to stop a surge of oil and natural gas from the well.

Campbell Soup (NYSE:CPB), the maker of branded convenience food products like soup, reported earnings that were in line, as it missed on revenues estimates. Campbell posted a profit of $0.30 per share, excluding non-recurring items, in-line with consensus; revenues fell 0.7% year over year to $1.52 billion versus consensus of $1.59 billion. The company issued in-line guidance for FY11, sees EPS of ~$2.59-2.64, excluding non-recurring items, vs. consensus of $2.64.

Freeport McMoRan (NYSE:FCX), the world’s largest publicly traded copper producer, has an upside bias as copper prices climbed ahead of the employment report in the second copper market in the world. Copper is heading for a third weekly advance in London before U.S. payrolls data and as stockpiles dropped for a 28th week, signaling metals demand is steady. Inventories tracked by the London Metal Exchange dropped 0.6% this week, posting the longest weekly falling streak since August 2004. In Shanghai, stockpiles dropped to a one-month low.

Hewlett-Packard (NYSE:HPQ), the largest PC maker in the world, gained 0.30% in pre-market trading a day after Dell bowed out of the bidding war for Utility storage company 3Par, leaving the acquisition to HP for $33 per share. Kaufman noted that while they understand and appreciate 3PAR technology, at nearly 9x C2011 revenue and 132x C2011 EPS, price seems a bit steep. The firm believes that the acquisition could help grow Hewlett-Packard’s storage business to a $5 billion business over next few years, but also, company is likely to have more gross margin impact than revenue due to company size.

Take-Two Interactive Software (NASDAQ:TTWO), the video game publisher, surged more than 13% in pre-market trading after the publisher of the “Grand Theft Auto” video games reported yesterday after the close an unexpected third-quarter profit and boosted its earnings outlook on sales of the newest release, “Red Dead Redemption.” Analysts at Kaufman noted that the beat and raised in outlook was driven by the blockbuster release of Red Dead Redemption that sold 6.9 million copies in the quarter.

W.R. Grace (NYSE:GRA), the global specialty chemicals and materials company, was initiated with a Buy at KeyBanc Capital Markets and a target price of $36 per share. The firm said the company is an emerging high quality specialty chemical company with good growth potential; benefits from leading market positions and favorable industry dynamics; can leverage solid internal fundamentals; and has good potential to drive margin expansion over time.