Futures Up; J.C. Penney, Yum Falling

ReutersScary?

Futures for the leading stock indexes are up this morning allaying, for the time being at least, fears that yesterday’s drop could be the start of a bigger market pullback.

Shares that are seeing a pullback this morning are J.C. Penney (JCP) and Yum Brands (YUM). The former is in dispute with hedge-fund creditors who are threatening to yank their funding:

In a letter sent last week, the bondholders, which include GSO Capital Partners and BlueCrest Capital, threatened to try and make J.C. Penney repay the roughly $326 million they and other creditors are owed unless the company takes measures to fix the alleged debt-term violations within 90 days, according to a Jan. 29 letter from the bondholders’ lawyers to the retailer’s general counsel reviewed by The Wall Street Journal.

The bondholders, represented by law firm Brown Rudnick LLP, hold more than half the debt, which comes due in 2037.

The company said Monday it has filed an action with the Court of Chancery in Delaware seeking an order preventing the bondholders from declaring a default. The company said the arrangements in question have been in place at various times over the last decade, without challenge from creditors.

Yum stock is dropping after its fourth-quarter earnings revealed the scale of its problems in China, caused in part fears related to the KFC parent’s chicken suppliers:

The data out of China, however, was bad, real bad. China same-store sales fell 6% during the fourth quarter, while operating profits in China dropped 5%.

Worse still, Yum doesn�t expect China to recover until the end of the year�and that will hit the bottom line. Because of the continued problems, the company said it would �no longer expect to achieve EPS growth in 2013.� In fact, Yum expects a �mid-single digit EPS decline.�

Yum’s shares are down 7% premarket, while Penney’s have fallen about 5%.

Meanwhile, despite Boeing (BA) being the only stock on the Dow Jones Industrial Average that rose yesterday, the news concerning investigations into its 787 Dreamliner�is continually grim:

As the probe of burning batteries aboard�Boeing�Co.’s�787 jets stretches into its second month, an international team of air-accident sleuths remains stumped about the underlying cause, according to people familiar with the details. This has fueled pessimism about how quickly the planes can resume flying.

Overall investigative activity remains intense, and a breakthrough could still come. But in the past few days, industry and government officials familiar with the probes on both sides of the Pacific have stressed the lack of progress. At a recent Department of Transportation briefing, according to one of these officials, government experts acknowledged “they may not be any closer to identifying root cause than they were” at the start of the National Transportation Safety Board’s high-profile investigation.

Edging up premarket ares shares of Moody’s (MCO) and McGraw-Hill (MHP) after both stocks saw double-digit drops yesterday in the wake of news that the US government is to sue McGraw-Hill unit Standard & Poor’s for the way it rated mortgage bonds in the lead up to the financial crisis.