In the U.S.: Stock Futures Fluctuate as BofA, Alcoa Fall

6 January 2012


Jobs data in: unemployment down to 8.5%, payrolls climb to 200,000. Early rally expected despite earnings season worries.

Barry Knapp, head of U.S. equity strategy at Barclays Capital, discusses the outlook for global stocks and his recommendation of technology, energy and health-care stocks. He speaks with Erik Schatzker on Bloomberg Television’s “InsideTrack.”

U.S. stock futures fluctuated, following three days of gains for the Standard & Poor’s 500 Index, before a report that will offer clues about the strength of the labor market in the world’s biggest economy.

Bank of America Corp. (BAC) and Goldman Sachs Group Inc. (GS)retreated in early New York trading. Alcoa Inc. (AA), which is due to start the earnings season on Jan. 9, slipped after saying it will close 12 percent of its global smelting capacity. Jazz Pharmaceuticals Inc. (JAZZ) advanced 4.9 percent after forecasting 2012 earnings that beat the average analyst estimate.

S&P 500 futures (SPH2) expiring in March gained 0.1 percent to 1,274.6 at 7:28 a.m. in New York. The benchmark measure has climbed 1.9 percent so far this week. Dow Jones Industrial Average futures expiring the same month added 16 points, or 0.1 percent, to 12,347.

“The market is anticipating good employment figures,” said Jacques Porta, a fund manager who helps oversee about $400 million at Ofi Patrimoine in Paris. “Recent numbers show a moderated, yet durable, improvement. It’s best to be cautious regarding the earnings season. Many growth-oriented companies are suffering from the situation in Europe and slower growth inemerging markets.”

Payrolls climbed by 155,000 workers in December after rising 120,000 in November, according to the median forecast of 84 economists surveyed by Bloomberg News.

U.S. Payrolls, Unemployment

The Labor Department’s report is due at 8:30 a.m. in Washington. Bloomberg survey estimates ranged from increases of 80,000 to 220,000. The jobless rate (USURTOT) climbed to 8.7 percent last month from 8.6 percent the previous month, according to the survey median. November’s unemployment rate was the lowest in more than two years.

ADP Employer Services said yesterday that companies in the U.S. increased payrolls by 325,000 in December, topping the median economist forecast for net hires of 178,000.

Most U.S. stocks rose yesterday as banks rallied and payrolls climbed, offsetting reduced profit forecasts at companies including Target Corp. and J.C. Penney Co.

Alcoa (SPX) is scheduled to mark the unofficial start of the fourth-quarter earnings season on Jan. 9. Profit at S&P 500 companies rose 6.2 percent during the September-December period (SPX), according to analyst estimates compiled by Bloomberg, which would mark the slowest growth since the third quarter of 2009.

U.S. stock mutual funds that invest in domestic equities had their second-worst redemptions last year as record market swings sent investors to the perceived safety of bond funds.

Investors pulled an estimated $132 billion from mutual funds that invest in U.S. stocks, the fifth straight year of withdrawals for domestic funds, according to preliminary data from theInvestment Company Institute, a Washington-based trade group whose numbers go back to 1984.

Bank of America

Bank of America slid 1.9 percent to $6.19 and Goldman Sachs dropped 0.8 percent to $93.83 in early New York trading after the White House was said to have no plans for a new mass mortgage refinancing program by an administration official with knowledge of the matter.

Bank of America, the second-largest U.S. lender (BAC), led a surge in bank shares yesterday, rallying 8.6 percent, as investors speculated that President Barack Obama’s administration would provide more aid to distressed homeowners.

Alcoa Shares Slide

Alcoa slipped 2.7 percent to $9.11 in New York. The biggest U.S. aluminum producer will close 12 percent of its global smelting capacity after the price of the lightweight metal slumped as global supply exceeded demand. The company plans to complete the cuts in the first half of this year.

Jazz Pharmaceuticals jumped 4.9 percent to $43.50 in New York. The drugmaker predicted earnings in 2012 of as much as $4.15 per share, compared with the average analyst estimate (JAZZ) of $3.39. The forecast reflects earnings after the company completes the acquisition of Azur Pharma.

Apollo Group gained 0.5 percent to $54.01 in German trading. The operator of the University of Phoenix and the biggest U.S. for-profit college reported fiscal first-quarter profit and sales (APOL) that topped analysts’ estimates (APOL) as more new students signed up for classes.

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