US STOCKS-Futures slip in light holiday trading

By Ellis Mnyandu

NEW YORK, Oct 8 (Reuters) - U.S. stock futures slipped on Monday as investors paused after major indexes hit record highs and before the start of the quarterly earnings reporting season.

Trading is expected to be light due to the Columbus Day holiday when U.S. government offices will be closed and bond markets are shut.

Stocks revived last week at the start of the fourth quarter, recovering from a summer sell-off caused by a credit squeeze and housing market losses. The Dow Jones industrial average and the S&P 500 surged to all-time highs on Friday after a solid September employment report rekindled optimism about the economy and profits.

"We are at new highs, so investors are taking a healthy, well-needed pause before the start of earnings. I expect an extremely quiet day," said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.

"Now that the credit problems seem to have subsided, the next focus is earnings. The key question, is the consumer alive or dead?"

On Monday S&P 500 futures SPc1 fell 4.40 points but were above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures DJc1 were down 25 points, and Nasdaq 100 NDc1 futures were off 4.25 points.

JPMorgan Chase & Co (JPM.N) and Bank of America Corp (BAC.N) are among stocks to watch after the Financial Times reported that the banks were likely to disclose losses of about $3 billion in mortgage securities and leveraged loans when they post earnings. For details, see [ID:nN08280164]

Both stocks rose in Europe.

But shares of Merrill Lynch & Co MER.N dropped 1.1 percent in Europe after JP Morgan had cut its rating on the Wall Street bank's stock, according to theflyonthewall.com. Credit Suisse also downgraded Merrill, according to the same Web site.

Buyout firms The Blackstone Group (BX.N) and Apollo Management each expressed interest last week in UK mortgage bank Northern Rock PLC NRK.L, the Wall Street Journal, citing unidentified sources, reported on its Web site. [ID:nN07279094]

Aluminum producer Alcoa (AA.N), a Dow component, unofficially opens the season for reporting third-quarter earnings on Tuesday. Investors are focused on signs of how the economy and profits are holding up in the housing slump.

Stocks of financial companies were last week's biggest winner as investors bet that the worst effects of the credit market turmoil are behind Wall Street.