* Alcoa beats expectations but cautions of slowdown
* Yum Brands defies China sluggish growth, raises outlook
* True Religion exploring sale, shares jump
* Futures: Dow off 22 pts, S&P off 1 pt, Nasdaq up 0.25 pt
By Chuck Mikolajczak
NEW YORK, Oct 10 (Reuters) - U.S. stocks were set for a
slightly lower open on Wednesday as earnings season started with
a warning from Alcoa about slower aluminum consumption,
underscoring concerns about sluggish worldwide growth.
Other large companies warned of slowed growth, including Dow
component Chevron and engine maker Cummins Inc.
Stronger demand from airplane and automobile producers
helped Alcoa, the largest U.S. aluminum producer, to
report third-quarter results that beat analysts' expectations.
Alcoa shares lost 1.6 percent to $8.98 in premarket trade.
Lackluster growth in China, the world's second-largest
economy, is expected to rein in corporate earnings in the third
quarter and dent profit forecasts as the Asian nation feels the
pinch of the debt crisis in the euro zone, a key trading
Earlier in the week, the World Bank cut its growth forecast
for East Asia on concerns China's slowdown could last longer
"You've seen very cautionary earnings results and even
forward guidance. Alcoa has good earnings, but their forward
guidance is lackluster. It points to a slow China and slow
global growth," said Richard Weeks, managing director at
HighTower Advisors in Vienna, Virginia.
"The question is when does sentiment change where (bad) news
dampens the market."
Analysts forecast third-quarter earnings of Wall Street's
S&P 500 companies would fall 2.3 percent from the
year-ago quarter, according to Thomson Reuters data, which would
be the first drop in U.S. quarterly earnings in three years.
According to data through Tuesday, 94 companies in the
benchmark S&P index have issued negative outlooks, compared with
22 positive pre-announcements, for a ratio of 4.3, the weakest
showing since the third quarter of 2001.
Going against general declines was Yum Brands Inc,
which gained 4.8 percent to $69.20 in premarket trading. The KFC
parent company had raised its full-year outlook after sales in
China held up, despite that nation's cooling economy.
S&P 500 futures shed 1 point 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 22
points, while Nasdaq 100 futures added 0.25 point.
The S&P 500 has fallen for three consecutive sessions on
growing concerns about corporate profits, with the index closing
on Thursday near the technical support level of 1,440.
Economic data expected Wednesday include wholesale
inventories for August at 10 a.m. (1400 GMT) and the Federal
Reserve's Beige Book of economic conditions at 2 p.m. (1800
Chevron Corp dipped 2 percent to $115.02 in
premarket after the second-largest U.S. oil company warned
third-quarter profits would be "substantially lower" than in the
previous quarter as a hurricane and maintenance curbed its oil
and gas output and a fire hit its refining arm.
U.S. engine maker Cummins Inc lowered its 2012
forecast for a second time this year, citing delays in customer
spending due to a weakening global economy, and said it would
cut up to 1500 jobs. Cummins shares dropped 4.3 percent to
$86.90 in premarket.
Earnings from warehouse chain Costco Wholesale Corp
were a bright spot; the company reported a 27 percent jump in
fourth quarter profit, on higher sales and membership fees.
Costco shares were up 3 percent to $102.60 in premarket trade.
Coming on the heels of a 2013 profit forecast that was cut
last month, FedEx Corp said it plans to slash costs at
its underperforming express air freight and services divisions,
with profit improvements of $1.7 billion planned at those
operations over the next four years. Shares gained 3.6 percent
to $88.66 in premarket.
True Religion Apparel Inc surged 24.4 percent to
$26.17 in premarket trading after the denim maker said it was
evaluating strategic alternatives which could include a possible
sale of the company, after receiving indications of interest
from third parties.