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

2 July 2012

“We still believe in the bull market.” Hope springs eternal?

U.S. stock futures are little changed, following the biggest June (SPX) rally since 1999 for the Standard & Poor’s 500 Index, as investors awaited data that may show manufacturing expanded at the slowest pace in eight months.

Micron Technology Inc. (MU) jumped 6 percent after agreeing to buy bankrupt Japanese chipmaker Elpida Memory Inc., gaining memory chip-making assets that may help it avert price swings that fueled four straight quarters of losses. Amylin Pharmaceuticals Inc. (AMLN), the drugmaker whose treatments include diabetes therapies, rallied 9.1 percent as it will beacquired by Bristol-Myers Squibb Co. (BMY) for $5.3 billion in cash.

Strategist Manley on Stocks, Earnings, Economy

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July 2 (Bloomberg) — John Manley, chief equity strategist at Wells Fargo Advantage Funds, talks about the outlook for the U.S. economy and markets. Manley speaks with Tom Keene, Sara Eisen and Scarlet Fu on Bloomberg Television’s “Surveillance.” (Source: Bloomberg)

S&P 500 futures expiring in September rose less than 0.1 percent to 1,357 at 8:29 a.m. New York time. The benchmark index gained 4 percent in June. Dow Jones Industrial Average futures retreated 9 points, or 0.1 percent, to 12,799.

The Institute for Supply Management’s factory index fell to 52 from 53.5 the prior month, according to economists surveyed by Bloomberg News. Readings greater than 50 signal growth.Construction spending increased in May for a third month, separate figures may show. Manufacturing indexes from the euro region to the U.K. and Japan beat economists’ forecasts, suggesting contractions in factory production are easing.

Micron rallied 6 percent to $6.69. The transaction for Elpida is valued at 200 billion yen ($2.5 billion). Micron will pay 60 billion yen in cash at the closing of the deal, while the remaining 140 billion yen in future annual installment payments through 2019 will be paid from cash flowgenerated by Micron’s payment for foundry services provided by Elpida.

Top Seller

Amylin Pharmaceuticals gained 9.1 percent to $30.76. The purchase comes a month after Bristol’s top seller, the blood- thinner Plavix with $7.1 billion in sales last year, began facing generic competition. In 2013, the New York-based company loses patent protection on its $1.6 billion HIV drug, Sustiva.

Volatility in the S&P 500 is returning to levels that drove valuations and stock volume down to rates not seen since at least 2003. Average daily price changes in the benchmark gauge for American equities doubled to 1 percent in June, according to data compiled by Bloomberg. At the same time, U.S. trading has plunged to 6.8 billion shares a day and valuations are 16 percent below the five-decade mean. Reaching those levels in tandem is unprecedented in at least nine years, the data show.

Investors whipsawed by volatility that reached twice the 50-year average in 2011 have pulled about $300 billion from mutual funds since the bull market began three years ago. With the third quarter marking the worst S&P 500 returns in election years since World War II, bears say widening price swings will keep individuals from returning to the market. Bulls say their exodus helped pull stocks lower just before growth in earnings and the economy helped spur the biggest June rally since 1999.

“We still believe in the bull market,” Laszlo Birinyi, president of Birinyi Associates Inc., said in a June 29 phone interview from Westport, Connecticut. “I’m just telling people to turn the page to the investments, the things that you can really quantify and put your fingers on. Stick to what truly matters: the company fundamentals.”


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