In the U.S.: Stock futures edge lower after two-day run; Fed, ECB eyed

30 July 2012

The good news had to run out some time. “Market is hesitating, waiting for additional positive news.”

Stock index futures dipped on Monday, indicating the S&P 500 may give back some gains from the prior two sessions that pushed the benchmark index to its highest close since May 3.

Increasing optimism last week that the Federal Reserve and the European Central Bank (ECB) might provide further stimulus sparked the S&P 500’s biggest two-day rally since December and lifted the Dow above 13,000 for the first time since May 7.

The Fed and the ECB both meet this week amid investor expectations of action to stimulate economic growth and hopes the ECB tackles a spreading euro zone debt crisis. ECB President Mario Draghi said last week the bank was ready to do whatever was necessary, within its mandate, to save the euro.

“After a very impressive two-day performance, the market is hesitating, waiting for additional positive news,” said Andre Bakhos, director of market analytics at Lek Securities in New York.

“Technically we are climbing near a resistance area, with the strong two-day run behind us; the market is looking for more fuel to propel it higher and the Fed and ECB meetings could be just what investors are looking for.”

In positive developments, Italy’s 10-year funding costs fell below 6 percent for the first time since April and Spanish yields pulled back from a peak hit last week as hopes for a stronger crisis response from policymakers spurred demand for the debt of vulnerable euro zone members.

S&P 500 futures fell 3.1 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 20 points, and Nasdaq 100 futures were unchanged.

S&P 500 companies set to report quarterly earnings include Anadarko Petroleum Corp (APC.N), Franklin Resources Inc (BEN.N) and Eastman Chemical Co (EMN.N).

Shaw Group (SHAW.N) surged 71.6 percent to $45.80 in premarket trading after the engineering company agreed to be acquired by Chicago Bridge & Iron Co (CBI.N) for about $3 billion in cash and stock.

Progenics Pharmaceuticals Inc (PGNX.O) plunged 49.2 percent to $5.49 and Salix Pharmaceuticals Ltd (SLXP.O) tumbled 15.4 percent to $44.99 in premarket trade after the companies said the U.S. Food and Drug Administration requested additional data in a complete response letter regarding its Relistor drug.

Chevron Corp (CVX.N) plans to invest $2 billion to develop its Lianzi oilfield straddling the maritime border between Republic of Congo and Angola, a company official said on Sunday.

Boeing Co (BA.N) said Sunday the National Transportation Safety Board is investigating a potential problem with an engine on a 787 Dreamliner following an incident at Charleston International Airport in South Carolina during a preflight test Saturday.

IPhone maker Apple Inc (AAPL.O) and Twitter are currently not in discussions on Apple taking a stake in the popular social networking site, sources said. Apple in recent months has held negotiations with Twitter to explore investing hundreds of millions of dollars in the company, The New York Times reported.

Economic data expected later in the day includes the Chicago Fed Midwest manufacturing index for June at 8:30 a.m. EDT (1230 GMT) and the July Texas manufacturing index from the Dallas Fed at 10:30 a.m. EDT (1430 GMT).

European stocks extended their rally after Italy’s debt auction and hopes of fresh measures from the ECB. The FTSEurofirst 300 .FTEU3 index of top European shares was up about 1 percent. .EU

Asian shares also advanced on expectations for central bank actions, with Japan’s Nikkei up 0.8 percent after hitting a one-week high.


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