BLBG: U.S. Index Futures Fluctuate Amid Earnings After Fresh Records
U.S. index futures fluctuated following a mix of earnings reports, as investors weighed the prospects for further gains after equities closed Monday at fresh records.
Johnson & Johnson climbed 2.2 percent after reporting quarterly profit that beat analyst estimates, and Goldman Sachs Group Inc. edged lower, even after its earnings jumped as legal costs fell and fixed-income revenue exceeded forecasts. IBM Corp. added 1.7 percent after sales increased for the first time in a key unit. Netflix tumbled 13 percent on weaker-than-anticipated subscriber growth.
Contracts on the S&P 500 Index expiring in September dropped 0.2 percent to 2,155.25 at 8:34 a.m. in New York, after the underlying gauge closed at an an all-time high for the fifth time in six days. Futures on the Dow Jones Industrial Average lost 5 points, or less than 0.1 percent, to 18,446 after the index set a record for a fifth straight session.
“If the U.S. market is at an all-time high and you have a day of waiting for news, investors trim exposure,” said Ben Kumar, investment manager at Seven Investment Management LLP, which oversees 10 billion pounds ($13 billion). Still, “the simple reason that the S&P 500 is at its all-time high is that the fear of a U.S. recession has now vanished, markets are no longer predicting a long period of deflation, they are no longer worried that the jobs recovery is mythical, masking underlying weakness.”
A report today showed new-home construction in the U.S. rose more than forecast in June, providing some momentum for residential real estate near the end of its busy selling season. Residential starts increased 4.8 percent to a 1.19 million annualized rate, the most since February, from 1.14 in May that was lower than previously estimated, according to Commerce Department data. Permits, a proxy for future construction, also climbed.
American shares recovered from their losses after the British vote to leave the European Union, with the S&P 500 taking its annual gain to 6 percent amid signs of strength in the economy and speculation that the Federal Reserve will push back the timing on interest-rate increases. On Monday, the equity advance was led by technology shares amid deals activity, while profit at Bank of America Corp. beat projections.
Even as the earnings season has delivered more positive surprises than negative ones so far, analysts estimate net income at S&P 500 companies will drop 5.8 percent in the second quarter, which would make it a fifth straight decline, the longest streak since 2009. Microsoft Corp. reports results after the market closes.
Among other stocks moving on earnings news, Yahoo! Inc. slipped 0.8 percent after posting a decline in sales. UnitedHealth Group Inc. was little changed, even as the largest U.S. health insurer reported a profit that beat analysts’ estimates, driven by growth at its Optum technology and consulting unit. Philip Morris International Inc. slid 1.9 percent after its earnings missed forecasts as the strong dollar hurt sales outside of the U.S.
The International Monetary Fund is scheduled to update its growth projections on Tuesday as Managing Director Christine Lagarde warned last week that estimates may be cut.
