In the U.S.: S&P 500 Futures Pare Gain As ECB Sees Increased Risks

6 June 2012


Warren Buffett calls for European reconciliation of not so “common culture or … labour practices.”

U.S. stock futures pared gains as European Central Bank President Mario Draghi said the economic outlook in the euro area faces increased downside risks.

JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) added at least 1.3 percent to pace gains among financial companies. Chesapeake Energy Corp. (CHK) rallied 2.9 percent as it’s said to be in advanced talks to sell pipelines to Global Infrastructure Partners for more than $4 billion. UnitedHealth Group Inc. (UNH) rose 1.5 percent after boosting its dividend and saying it will buy back about $4.3 billion in added shares. Facebook Inc. (FB) added 1.2 percent after slumping 32 percent since it went public.

Standard & Poor’s 500 Index futures expiring in June advanced 0.4 percent to 1,290.80 at 8:59 a.m. New York time, paring a gain of as much as 1.2 percent. Dow Jones Industrial Average futures added 48 points, or 0.4 percent, to 12,174.

“Draghi didn’t bring the meat the market dogs were hoping for as he seems to be standing pat for now, likely waiting for more stress to envelope before announcing something new of substance,” Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, wrote in a note.

The ECB today left its benchmark interest rate at 1 percent as the debt crisis tightens its grip on the euro-area economy, increasing pressure on policy makers to deliver further stimulus. Draghi said officials will extend their offerings of unlimited cash until the start of 2013 for periods up to three months as they try to head off risks stemming from the euro region debt crisis.

“We continue to expect the euro-area economy to recover gradually,” Draghi said at a press conference in Frankfurt today.

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc. (BRK/A), said he expects the U.S. economy to avoid another recession as long as Europe can contain its debt crisis. There won’t be a recession “unless events in Europe develop in some way that spills over here big-time,” Buffett said yesterday at the Economic Club of Washington, D.C.

“They’re in on a common currency but they’re not in on a common fiscal policy or a common culture or common labor practices,” Buffett said. “They have to reconcile some of these things.”

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