In the U.S.: Stock Futures Little Changed Before Factory Report

1 May 2012

After yesterday’s decline, poor manufacturing data may result in yet another sluggish trading session.

U.S. stock futures were little changed, following the biggest monthly decline for the Standard & Poor’s 500 Index since September, before a report that may show manufacturing expanded at a slower pace in April.

Sears Holdings Corp. (SHLD) rallied 5.1 percent as it forecast a profit after a gain from selling some stores in the U.S. and Canada. Delta Air Lines Inc. rose 2.8 percent after agreeing to buy a refinery from ConocoPhillips (COP), breaking with U.S. carriers’ tradition of not owning their own fuel assets. Expedia Inc. (EXPE), an online-travel company which rose to the highest since at least 2005, lost 2.9 percent as Barclays Plc cut its rating.

S&P 500 futures expiring in June increased less than 0.1 percent to 1,393.80 at 8:25 a.m. New York time. The benchmark measure for American equities retreated about 0.7 percent in April,halting a four-month rally. Dow Jones Industrial Average futures advanced 14 points, or 0.1 percent, to 13,169 today.

Equity futures swung between gains and losses before a report that may show the Institute for Supply Management’s factory index eased to 53 last month from 53.4 in March, according to the median estimate of 77 economists surveyed by Bloomberg News. Construction spending rose in March for the first time in three months, other data may show.

Investors also watched earnings reports as about 74 percent of S&P 500 companies that reported results since April 10 have beaten earnings projections, according to data compiled by Bloomberg. Per-share profits have grown 5.9 percent in the first quarter, Bloomberg data show.

Selling Stores

Sears Holdings rallied 5.1 percent to $56.50 after forecasting first-quarter earnings per share of $1.46 to $1.84. Two analysts surveyed by Bloomberg expected a loss of $1.25 a share. The company had a gain of about $235 million after taxes and minority interests from selling the stores.

The retailer said yesterday it plans to spin off its Hometown and Outlet stores, which may give Chairman Edward Lampert an opportunity to hold a larger stake in the new publicly traded company.

Delta Air Lines rose 2.8 percent to $11.27. The world’s second-biggest airline will pay $180 million for the complex in suburban Philadelphia. Pennsylvania’s state government is putting up $30 million in assistance to defray the expense. Delta estimated the accord will save $300 million on its annual fuel bill, which was $11.8 billion last year.

Expedia slid 2.9 percent to $41.40 after being cut to the equivalent of sell at Barclays. The share-price estimate is $34. Expedia had risen 36 percent in the previous five days. Last week, it said first-quarter profit and revenue beat estimates.

Pharmaceutical Sales

Pfizer Inc. (PFE) lost 1 percent to $22.66. The world’s largest drugmaker said first-quarter revenue fell to $15.4 billion from $16.5 billion a year earlier, hurt by a 25 percent drop in sales from its pharmaceutical business because of the loss of U.S. patent protection for Lipitor.

Stock market trend charts and investor sentiment are signaling the S&P 500 may surpass its2012 high before the rally gives way to a 10 percent decline, according to UBS AG.

The benchmark gauge for U.S. equities is likely to exceed this year’s peak of 1,419.04 and climb to 1,460, after it held last month above its March 6 low, said Michael Riesner and Marc Mueller, Zurich-based analysts with UBS. The S&P 500 halted a five-day slump on April 10 at 1,358.59. Two weeks later, it rebounded from another drop at 1,358.79.

The level of 1,358 “represents a new pivotal support for the SPX,” the analysts wrote in a note yesterday, referring to the S&P 500’s ticker. “As long as the market trades above this level, the U.S. market remains bullish biased,” they said. “Given the fact that the SPX has not met our initial correction target at 1,340 and on the back of the low bullish consensus, we still can’t rule out a final overshooting.”

Positive Returns

For the first time since the start of 2008, bonds were the only investments to provide positive returns amid renewed concern the global economy is slowing and as widening deficits inEurope threaten contagion.

Fixed-income assets — from Australian government debt to U.S. Treasuries to global junk bonds– gained 0.7 percent last month including reinvested interest, according to Bank of America Merrill Lynch index data. The MSCI All-Country World Index of stocks lost 1.1 percent including dividends while the Standard & Poor’s GSCI Total Return Index of metals, fuels and agricultural products fell 0.5 percent. The U.S. Dollar Index (DXY) dropped 0.3 percent.

“Concerns of an economic slowdown and renewed risks over Europe are the biggest drivers,” Anthony Valeri, a market strategist in San Diego at LPL Financial, which oversees $330 billion, said April 26 in a telephone interview. “There’s renewed concerns about Europe, and Spain in particular.”


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