In the U.S.: S&P 500 Futures Little Changed As Europe Tempers Job Data

9 August 2012

Mildly positive job numbers overshadowed by European fears.

U.S. stock futures were little changed, following a four-day advance in the Standard & Poor’s 500 Index, as concern about Europe’s economy tempered data showing that jobless claims unexpectedly declined last week.

News Corp. (NWSA), the media company controlled by billionaire Rupert Murdoch, slid 3 percent after reporting a loss. Monster Beverage Corp. (MNST) sank 7.1 percent after profit and sales missed estimates as costs increased. Anadarko Petroleum Corp. (APC), the second-largest independent U.S. oil and natural-gas producer by market value, retreated 1 percent as attempts to reach a settlement in a $25 billion lawsuit have reached an “impasse.”

S&P 500 futures expiring in September fell 0.1 percent to 1,396.5 at 9:03 a.m. New York time. Dow Jones Industrial Average futures rose 5 points, or less than 0.1 percent, to 13,125. The number of shares changing hands in Stoxx Europe 600 Index’s companies was 31 percent lower than the 30-day average at this time of day, according to data compiled by Bloomberg.

“It’s kind of blah,” said Malcolm Polley, who oversees about $1.1 billion as chief investment officer at Stewart Capital inIndiana, Pennsylvania. “The jobless claims report was better-than-estimated, but it’s just one data point. We need to see other reports to get the market moving dramatically higher. In addition, growth is slowing in other parts of the world. It will take time.”

Labor Department figures showed that jobless claims unexpectedly dropped by 6,000 to 361,000 in the week ended Aug. 4. The median forecast of 43 economists surveyed by Bloomberg News called for an increase to 370,000. The euro-area’s economy will shrink 0.3 percent this year, according to a European Central Bank survey of professional forecasters. The previous forecast called for a 0.2 percent contraction.

Above 1,389

A four-day rally has taken the S&P 500 (SPX) up almost 10 percent from a five-month low on June 1. The index is trading above the average year-end forecast among Wall Street strategists of 1,389. About 72 percent of S&P 500 companies which reported second-quarter results so far have beaten analysts’ earnings estimates, according to data compiled by Bloomberg.

News Corp. lost 3 percent to $23. Shrinking advertising revenue led to a writedown of its Australian publishing business.

Monster sank 7.1 percent to $62.99. The company and Atlanta-based Coca-Cola Co. are facinghigher costs for ingredients such as sweeteners and plastic for bottles. The cost of sales at Monster rose 31 percent to $285.6 million in the second quarter.

‘Reasonable Range’

Anadarko dropped 1 percent to $69.10. The lawsuit was brought against its Kerr-McGee Corp. unit by the U.S. and creditors of Tronox Inc. Anadarko said the “reasonable range” of a potential loss in the case is zero to $1.4 billion, according to a regulatory filing by the company today.

Asian dealmaking in North America confirms energy and gold stocks are a bargain when compared with the underlying commodities, according to Frank Holmes, U.S. Global Investors Inc.’s chief executive officer. The shares have trailed commodity prices for more than a year.

“The disparities mean that the cheapest resources are not found in the ground — they’re listed” on stock exchanges, Holmes wrote three days ago in a blog posting.

Proposed multibillion-dollar takeovers of Canadian energy producers by Cnooc Ltd. and Petroliam Nasional Bhd show the value available in commodity stocks, according to Holmes.

Cnooc, China’s largest offshore-oil explorer, offered to acquire Nexen Inc. in July for 61 percent more than the stock’s market price. The proposed deal followed an offer in June from Petronas, Malaysia’s state-owned energy company, for Progress Energy Resources Corp. that was 77 percent above the market price. The bid was raised last month.

Holmes’s firm, based in San Antonio, runs three commodity- related mutual funds with total assets of about $1 billion. The biggest is the Global Resources Fund, which returned 12 percent during the two-year period depicted in the chart, according to data compiled by Bloomberg.


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