BLBG: U.S. Index Futures Fluctuate; S&P 500 Set for Fifth Weekly Gain
By Daniela Silberstein and Whitney Kisling
Aug. 14 (Bloomberg) -- U.S. stock-index futures drifted between gains and losses before reports on industrial production and consumer sentiment. European and Asian shares advanced.
General Electric Co. climbed in early trading in New York as investors awaited Federal Reserve figures on the output at manufacturers, mines and utilities. Exxon Mobil Corp. and Alcoa Inc. rose with oil and metal prices. Abercrombie & Fitch Co. fell after reporting a second-quarter loss, while Amgen Inc. slid 1.2 percent after an analyst downgrade.
Standard & Poor’s 500 Index futures expiring in September slipped 0.2 percent to 1,011.7 as of 8:51 a.m. in New York, after rising as much as 0.2 percent earlier. Dow Jones Industrial Average futures lost 0.3 percent to 9,364 and Nasdaq- 100 Index futures decreased 0.7 percent to 1,620.25. European and Asian shares advanced.
Stocks gained yesterday after investor John Paulson’s hedge fund bought stakes in banks, helping offset an unexpected slump in retail sales. The S&P 500 has added 0.2 percent this week, a fifth straight gain in the longest winning streak since April.
“The economic data is important for the market in an environment where we don’t have much other news,” said Andreas Nigg, a fund manager at Vontobel Asset Management in Zurich, which oversees about $30.5 billion. “The upsurge may continue but we are in the latter phase of the rally and therefore the risk increases.”
A 50 percent rebound from a 12-year low on March 9 left the S&P 500 trading at 18.6 times the profits of its companies on Aug. 7, the highest valuation since 2004, according to weekly Bloomberg data.
Earnings Analysis
Per-share earnings topped analysts’ estimates by 11 percent on average for the companies in the S&P 500 that have released results since June 17, according to data compiled by Bloomberg. Profits slumped about 30 percent in the period, a record eighth straight quarter of falling earnings.
GE, the world’s biggest maker of power-plant turbines, added 1 percent to $14.24 in New York.
Bank of America Corp. extended its 6.7 percent gain from yesterday, adding 1 percent to $17.17, while Citigroup Inc. climbed 3.5 percent to $4.20.
Industrial production probably rose for the first time in nine months after mid-year retooling at automakers and as a federal “cash-for-clunkers” program spurred demand for cars, economists said before reports today. Output at manufacturers, mines and utilities climbed 0.4 percent, erasing the previous month’s decline, according to the median forecast in a Bloomberg News survey before a Fed report at 9:15 a.m. in Washington.
Economy Watch
Instead of a so-called New Normal of subdued growth, the U.S. may be heading for a robust recovery. The worst recession since the 1930s has created a reservoir of demand that will buoy the economy, say a growing number of economists led by James Glassman at JPMorgan Chase & Co., former Fed Governor Laurence Meyer and Stephen Stanley at RBS Securities Inc.
Boeing Co. said it stopped work more than a month ago on two sections for the 787 Dreamliner after flaws were found on 23 airplanes. The 787 was almost two years behind its initial May 2008 first-delivery target before the latest delay. Shares of the second-biggest defense contractor fell 2.4 percent to $45.50.
Exxon, the biggest U.S. oil company, gained 0.2 percent to $68.91. Crude rose for a third day as speculation the global economy is recovering from recession bolstered expectations of a rebound in fuel demand. Alcoa, the largest aluminum producer, added 1 percent to $13.85 as metal prices increased.
‘Dramatically Overpriced’
U.S. stocks are “dramatically overpriced” because the fallout from the financial crisis will continue to hurt consumer spending, said David Tice, Federated Investors Inc.’s chief portfolio strategist for bear markets.
“I’d love for prosperity to return, unfortunately I think you need to be realistic and it takes time to work off these excesses” from a bubble in credit markets, Tice said in an interview with Bloomberg Television.
Tice, who predicts that the Standard & Poor’s 500 Index will eventually slump to 400, said he would add to short positions if the market goes much higher.
To contact the reporters on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net.
