In the U.S.: Stock-Index Futures Rise on GE, Microsoft Earnings

20 April 2012

Impressive earnings from some big names, set to lift markets today.

U.S. stock-index futures rose, indicating the Standard & Poor’s 500 Index will snap two days of losses, as Microsoft Corp. and General Electric Co. (GE) reported earnings that beat estimates.

Microsoft, the world’s largest software maker, jumped 3.3 percent while GE added 1.1 percent.Schlumberger Ltd. (SLB) rallied 3.6 percent after its first-quarter profit beat projections. SanDisk Corp. (SNDK) lost 12 percent after forecasting sales that were less than some analysts estimated.

S&P 500 futures expiring in June gained 0.5 percent to 1,378.90 at 8:50 a.m. in New York. Dow Jones Industrial Average futures climbed 73 points, or 0.6 percent, to 12,975 today.

“On the back of some weaker recent economic data, the earnings story continues to showcase that companies can ring out some profits here,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. “With the constant noise in the background of Europe we seem to be focusing more on the domestic story, at least today. That just gives more credence to the fact that the recovery continues to be in place.”

Profits for the 93 companies in the S&P 500 that have reported results so far are beating estimates by 8.5 percent, according to data compiled by Bloomberg. The benchmark gauge for U.S. equities has risen 9.5 percent in 2012, even after the index lost 0.6 percent yesterday as home sales fell last month and jobless claims were more than forecast last week.

A report today showed German business confidence unexpectedly increased for a sixth month in April, adding to evidence that Europe’s largest economy can weather the sovereign-debt crisis. The Munich-based Ifo institute said today its business climate index, based on a survey of 7,000 executives, rose to 109.9 from 109.8 in March. Economists forecast a drop to 109.5, according to the median of 40 economists in a Bloomberg News survey.

IMF Funding

The Group of 20 will announce new funding for the International Monetary Fund’s European reserves that will “satisfy” requests from Managing Director Christine Lagarde, Russian Deputy Finance Minister Sergei Storchak said. Lagarde, who has called Europe the “epicenter” of risks to the world economy, is seeking more than $400 billion in new funding from member countries.

Microsoft (MSFT) rose 3.3 percent to $32.03. The Redmond, Washington-based company reported net income of 60 cents a share, exceeding the 57-cent average estimate of analysts surveyed by Bloomberg amid better-than-expected sales of Windows and Office software for businesses.

General Electric Co. rose 1.1 percent to $19.35. The maker of aircraft engines and provider of financial services beat analysts’ earnings estimates as profit gains at its energy business, its largest industrial division, outpaced finance for the first time in two years, according to today’s report.

Drilling Rigs

Schlumberger, the world’s largest oilfield-services provider, gained 3.6 percent to $72.30. The world’s largest oilfield-services provider said first-quarter profit rose 38 percent as the number of U.S. rigs drilling for oil reached a record.

Advanced Micro Devices Inc. (AMD) climbed 2.1 percent to $8.14. The second-largest maker of processors for personal computers said second-quarter sales will grow about 3 percent from the first three months. That indicates revenue of about $1.63 billion, compared with the $1.59 billion average analyst estimate compiled by Bloomberg.

Honeywell International Inc. (HON), the maker of digital flight controls and work boots, rallied 3.5 percent to $60.05 after the company posted a first-quarter profit that beat analysts’ estimates and boosted its full-year forecast.

McDonald’s Corp. gained 1.8 percent to $97. The world’s largest restaurant chain reported a 4.8 percent gain in first- quarter profit as new menu items such as Chicken McBites attracted U.S. consumers.

SanDisk, which makes memory chips used in mobile devices, declined 12 percent to $35.65 after giving a second-quarter sales forecast that fell short of some analysts’ estimates. Chip production at SanDisk and its rivals is outpacing demand, causing prices to fall, Chief Executive Officer Sanjay Mehrotra said on a conference call with analysts yesterday. Some of the company’s customers also ordered fewer chips for mobile phones than SanDisk had predicted, he said.


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