In the U.S.: Stock Futures Fall on Concern About Global Economy

23 April 2012


Impact of Europe’s debt crisis still relevant to U.S. markets as manufacturing data disappoints.

U.S. stock futures fell, following last week’s advance for the Standard & Poor’s 500 Index, after data showed that manufacturing shrank in the euro-area and China while concern grew about Europe’s sovereign debt crisis.

Alcoa Inc. (AA) and Halliburton Co. (HAL) dropped at least 1.3 percent as commodities declined.Bank of America Corp. and Citigroup Inc. (C) slumped more than 2.5 percent as the cost of insuring Europe’s debt increased after the Dutch government split and French President Nicolas Sarkozy lost ground in elections. Kellogg Co. (K) retreated 6.3 percent after the largest U.S. maker of breakfast cereal reduced its full-year earnings estimate.

S&P 500 futures expiring in June lost 1 percent to 1,361.70 at 8:36 a.m. New York time. Dow Jones Industrial Average futures dropped 127 points, or 1 percent, to 12,861.

Equity futures joined a global slump as euro-area services and manufacturing declined more than estimated in April, while data indicated China’s production will contract for a sixth month, according to a Markit Economics and HSBC Holdings Plc. Sarkozy’s hopes of a second term rest on winning voters from the anti-euro National Front before the final round of elections. Dutch Prime Minister Mark Rutte failed to reach a deal with a coalition party over austerity measures.

The S&P 500 rose 9.6 percent this year amid better-than- estimated economic and corporate data. Earnings per share have topped forecasts at 85 percent of S&P 500 companies that reported results since April 10, according to data compiled by Bloomberg. Per-share profits grew 3.3 percent in the first three months of the year and will increase 8.8 percent during all of 2012, the data showed.

Commodity Shares

Energy and raw material producers dropped today as commodities declined. Alcoa, the largest U.S. aluminum producer, slid 1.3 percent to $9.57. Halliburton, the world’s largest provider of hydraulic-fracturing services, retreated 1.4 percent to $32.83.

Hedge funds cut their bets on higher commodity prices by the most in four months on mounting concern that Europe’s debt crisis will derail global growth and curb demand for raw materials. Money managers lowered net-long positions across 18 U.S. futures and options by 11 percent to 898,022 contracts in the week ended April 17, the most since Dec. 20, data from the Commodity Futures Trading Commission show.

American banks joined a 2.7 percent drop in a gauge of European lenders. Bank of Americadeclined 3.9 percent to $8.03. Citigroup decreased 2.5 percent to $33.05.

Kellogg’s Forecast

Kellogg tumbled 6.3 percent to $50.57. Earnings per share, including the impact of its acquisition of Pringles potato chips, will be $3.18 to $3.30 for the year, the Battle Creek, Michigan-based company said today in a statement. Kellogg previously predicted $3.25 to $3.37 a share. Analysts projected $3.48, the average of estimates compiled by Bloomberg.

Wal-Mart Stores Inc. (WMT) slumped 4.5 percent to $59.65. The company’s probe of possible bribery in Mexico may prompt executive departures and steep U.S. government fines if it reveals senior managers knew about the payments and didn’t take strong enough action, corporate governance experts said. results on April 23.

Apple Inc. (AAPL), which reports results tomorrow, fell 0.7 percent to $569.18. Quarterly reports scheduled for this week also include economic bellwether United Parcel Service Inc. and AT&T Inc., the largest U.S. phone company. Caterpillar Inc., the world’s biggest maker of construction and mining-equipment, and Amazon.com Inc., the world’s largest Internet retailer, are due to announce their results.

Amylin Pharmaceuticals Inc. (AMLN) rallied 11 percent to $25.35. The maker of the diabetes drugs Bydureon and Byetta is seeking a buyer after rejecting an unsolicited bid from Bristol-Myers Squibb Co., two people with knowledge of the matter said.

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