In the U.S.: Stock Futures Drop Amid Political Turmoil in Europe

9 May 2012

Pessimism abound, as investors seek to “ride out the uncertainty surrounding Greece and the euro zone.”

U.S. stock-index futures fell, indicating the Dow Jones Industrial Average (INDU) will drop for a sixth day, as investors speculated political wrangling in Europe may intensify, harming the global economic recovery.

Green Mountain Coffee Roasters Inc. declined 2.7 percent in German trading after removing founder Robert P. Stiller as chairman. Ford Motor Co. (F) retreated 1.4 percent after saying it will recall 27,000 vehicles. Walt Disney Co. rose after profit beat estimates.

Futures on the Standard & Poor’s 500 Index (SPX) expiring in June slid 0.9 percent to 1,346.2 at 7:25 a.m. in New York. Dow futures lost 93 points, or 0.7 percent, to 12,774. The Dow average has slumped 2.6 percent in the past five days.

“We have for the moment the risk-off trade,” said Hans Goetti, Singapore-based chief investment officer for Asia at Finaport Investment Intelligence, which has $1.5 billion in assets under management. He spoke in a Bloomberg Television interview with John Dawson. “We have to ride out the uncertainty surrounding Greece and the euro zone. At the moment it does not look very good.”

Concern about the European debt crisis has helped drive the S&P 500 down 2.5 percent in May. The stand-off in Greece since an inconclusive May 6 election has reignited European concern over the nation’s ability to hold to the terms of its two bailouts negotiated since May 2010. With parliament split and policy makers in Berlin and Brussels urging Greece to stay the course, the country at the epicenter of the debt crisis is again facing the risk of an exit from the euro.

Greek Meetings

Alexis Tsipras, lead of the Syriza party, is due to meet Antonis Samaras of New Democracy andEvangelos Venizelos, the former finance minister who leads the Pasok party, from about 5 p.m. in Athens today to discuss a government alliance.

Still, confidence among U.S. chief executive officers in the first quarter climbed to the highest level in almost three years, a private survey showed. The Young Presidents’ Organization said today that higher expectations for the economy, sales and labor market helped push up its Global Pulse Index of U.S. sentiment to 65.1, the strongest since the survey began in July 2009, from 62.2 in the prior three months. Readings greater than 50 show the outlook was more positive than negative.

Green Mountain (GMCR) slid 2.7 percent to $25.68. The maker of Keurig coffee machines stripped Stiller of his position as chairman after he sold shares to meet a margin call at a time when the company’s trading policies prohibited such sales.

Green Mountain Chairman

Michael J. Mardy, chairman of the audit and finance committee, will serve as interim chairman starting immediately, Waterbury, Vermont-based Green Mountain said late yesterday. About $125.5 million of Stiller’s Green Mountain stock was sold May 7 to meet margin requirements after the shares tumbled last week, according to a filing with the U.S. Securities and Exchange Commission yesterday.

Ford fell 1.4 percent to $10.46 in pre-market trading in New York. The carmaker said it will recall 27,000 Windstar vehicles citing axle corrosion issues.

MercadoLibre Inc. (MELI) fell 6.8 percent to $81.99 in early trading in New York. The Latin American online-auction site posted first-quarter earnings excluding some items of 45 cents a share, falling short of the average analyst estimate in a Bloomberg survey by 1 cent.

Seattle Genetics Inc. (SGEN) plunged 8.6 percent to 17.40 in late trading in New York. The maker of a drug for Hodgkin lymphoma reported a first-quarter sales were $48.2 million, missing the average analyst estimate of $51.8 million.

Human Genome

Human Genome Sciences Inc. (HGSI) slipped 2.8 percent to $14.21 in Germany. GlaxoSmithKline Plc said it will begin a hostile $2.6 billion tender offer at $13 a share this week for the U.S. company after it rebuffed a takeover approach.

Disney rose 0.6 percent to $44.58 in Germany. The world’s largest entertainment company said second-quarter net income increased to $1.14 billion, or 63 cents a share, from $942 million, or 49 cents, a year earlier. Excluding one-time items, profit of 58 cents beat the 55-cent average of 28 estimates compiled by Bloomberg.


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