In the U.S: U.S. Stock Futures Fall On FedEx, Economic Reports

5 September 2012

“Barometer for the economy” shows signs of real sector decline.

“U.S. stock futures declined, signaling the Standard & Poor’s 500 Index may fall for a second day, as FedEx (FDX) Corp. cut its earnings forecast and reports showed economies are slowing more than anticipated.

FedEx, a barometer for the economy because it delivers goods from mobile phones to pharmaceuticals, slid 2.9 percent after projecting its first decline in quarterly earnings in almost three years. Cliffs Natural Resources Inc. (CLF) slipped 2.3 percent as commodity prices fell.Facebook Inc. (FB) rose 2.5 percent after Chief Executive Officer Mark Zuckerberg said he won’t start selling his holdings in the company for at least a year.

Futures on the S&P 500 (SPX) expiring this month declined 0.2 percent to 1,403.2 at 8:31 a.m. in New York. The benchmark gauge slipped 0.1 percent yesterday. Contracts on the Dow Jones Industrial Average fell 21 points, or 0.2 percent, to 13,029.

Stock futures trimmed losses after two central bank officials briefed on the plan said European Central Bank President Mario Draghi’s bond-buying proposal involves unlimited purchases of government debt that will be sterilized to assuage concerns about printing money. To sterilize the bond purchases, the ECB will remove from the system elsewhere the same amount of money it spends, ensuring the program has a neutral impact on the money supply.

Draghi told the European Parliament this week that the ECB needs to intervene in bond markets to wrest back control of interest rates in the fragmented euro-area economy and ensure the survival of the common currency. Policy makers will start deliberating on the plan later today and Draghi will announce whether it has been agreed to at a press conference tomorrow.

Earlier today, Michael Fuchs, a member of German Chancellor Angela Merkel’s party, said he’s against “excessive” bond purchases by the European Central Bank. Fuchs, deputy parliamentary leader of Merkel’s Christian Democratic Union party, warned in a Bloomberg Television interview that ECB bond purchases could lead to inflation.

Equity futures slumped earlier amid disappointing economic reports. Euro-area services and manufacturing contracted more than initially estimated in August, London-based Markit Economics said today. A composite index based on a survey of purchasing managers in both industries in the 17-nation euro area fell to 46.3 from 46.5 in July, below an initial estimate of 46.6 published on Aug. 23. A reading below 50 indicates contraction.

FedEx lost 2.9 percent to $85. The operator of the world’s largest cargo airline said profit for the quarter that ended Aug. 31 will range from $1.37 to $1.43 a share. That was less than its June 19 forecast of $1.45 to $1.60 a share and year- earlier earnings of $1.46. It would mark the first drop in adjusted earnings per share since the quarter that ended November 2009.

Cliffs Natural Resources, the largest U.S. iron-ore producer, slid 2.3 percent to $32.90. The S&P GSCI gauge of 24 commodities slipped 0.2 percent.

Facebook gained 2.5 percent to $18.18. Zuckerberg, faced with a plummeting stock price and deluge of shares hitting the market, has yet to adopt a share sale plan, the Menlo Park, California-based company said yesterday in a filing with the U.S. Securities and Exchange Commission. Typically, insiders use plans to pare their stakes over time to avoid flooding the market.


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