In the U.S.: Stock Futures Drop On Europe As Retail Sales Decline

13 June 2012

Safe-haven assets set to trade up today as Europes woes continue to weigh in.

U.S. stock futures retreated, following yesterday’s rally, as a report showed weakening retail sales while borrowing costs rose in Italy and Germany.

Bank of America Corp. and Citigroup Inc. (C) slid at least 1 percent to pace losses in financial companies. Expedia Inc. (EXPE), an online travel service, dropped 1.3 percent after Lazard Ltd. cut its rating on the shares. Dell Inc. (DELL) climbed 2.5 percent as the third-largest personal-computer maker said it will pay a dividend for the first time. Johnson & Johnson gained 2.1 percent after Jefferies Group Inc. raised its recommendation for the world’s second-biggest maker of health-care products.

Standard & Poor’s 500 Index futures expiring in September lost 0.5 percent to 1,313 at 8:56 a.m.New York time. The benchmark gauge rose 1.2 percent yesterday. Dow Jones Industrial Average futures dropped 43 points, or 0.3 percent, to 12,471.

Equity futures slid as retail sales in the U.S. fell in May for a second month as slower employment and subdued wage gains damped demand, a sign the largest economy is cooling. Spain and Italy appealed to European policy makers to step up their response to the financial crisis after a 100 billion-euro ($125 billion) lifeline for Spanish banks failed to calm markets.

Stocks rose yesterday amid speculation the Federal Reserve will take steps to stimulate the economy and after the European Central Bank endorsed a plan to guarantee bank deposits. The policy-setting Federal Open Market Committee meets next week.

Some of the largest financial companies retreated today. Bank of America declined 1.3 percent to $7.39. Citigroup dropped 1 percent to $27.35. JPMorgan Chase & Co. (JPM) slid 0.4 percent to $33.65.

Didn’t Understand

JPMorgan Chief Executive Officer Jamie Dimon told Congress the bank let traders take risks they didn’t understand while he didn’t answer key questions about more than $2 billion in trading losses. In testimony prepared for a hearing today, Dimon expressed regret over losses in the bank’s chief investment office.

Expedia slumped 1.3 percent to $48.12 after being downgraded to neutral at Lazard.Chesapeake Energy Corp. (CHK), the U.S. energy explorer facing a cash shortfall because of falling natural-gas prices, lost 1.5 percent to $17.20. The shares were cut to market perform at Sanford C Bernstein & Co. McDonald’s Corp. (MCD), the largest restaurant chain, slid 0.9 percent to $86.70 as Goldman Sachs Group Inc. reduced its rating to neutral.

Dell rallied 2.5 percent to $12.27. The quarterly payout of 8 cents a share will begin in the period that ends in October, the Round Rock, Texas-based company said in a statement. The dividend’s yield would be 2.7 percent, based on the stock’s closing price yesterday.

Johnson & Johnson (JNJ) gained 2.1 percent to $64.42 after being raised to buy from hold at Jefferies by equity analyst Jeffrey Holford. The 12-month share-price estimate is $72.


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