In the U.S.: U.S. Stock Futures Rise as Concern About Europe Eases

17 April 2012


These fickle markets, up two days, down the other. S&P expected to end at 1350 for 2012.

U.S. stock futures advanced, following a two-day decline in the Standard & Poor’s 500 Index, as increased demand at a Spanish auction helped ease concern about Europe’s sovereign debt crisis.

Bank of America Corp. and Citigroup Inc. (C) both advanced 1.6 percent, following gains in European lenders. U.S. Bancorp, the nation’s fifth-largest lender by deposits, climbed 0.7 percent as first-quarter profit increased 28 percent. Goldman Sachs Group Inc. added 0.3 percent after earnings beat estimates and the company boosted its dividend 31 percent.

S&P 500 futures expiring in June rose 0.7 percent to 1,372.70 at 8:53 a.m. New York time. Dow Jones Industrial Average futures increased 73 points, or 0.6 percent, to 12,923.

Equity futures rose as Spain sold 12-month and 18-month bills a day after borrowing costs climbed to the highest level this year. Investors also watched earnings reports. While S&P 500 per-share profit growth slowed to 1.7 percent during the first three months of the year from 4.9 percent in the fourth quarter, it will accelerate to 8.6 percent during all of 2012, according to analyst estimates compiled by Bloomberg.

Stock futures gained even after a report showed builders began work on fewer homes than forecast in March, signaling a sustained industry recovery will take time to get under way.

American banks joined a rally in European lenders. Bank of America added 1.6 percent to $8.93. Citigroup increased 1.6 percent to $34.55.

Beating Estimates

U.S. Bancorp (USB) rose 0.7 percent to $31.38. Net income rose to $1.34 billion, or 67 cents a share, from $1.05 billion, or 52 cents, a year earlier, the Minneapolis-based bank said today in a statement. Earnings beat the 64-cent average estimate of 31 analysts surveyed by Bloomberg.

Goldman Sachs climbed 0.3 percent to $118.14. The quarterly dividend was increased to 46 cents a share from 35 cents. Chief Executive Officer Lloyd C. Blankfein, who began cutting costs in 2011 as revenue declined for the second straight year, is banking on international expansion and a market rebound to restore profit growth. Gains in stock and corporate debt markets during the first quarter boosted trading, which generated 60 percent (GS) of revenue last year, compared with the fourth quarter.

Coca-Cola Co. (KO) added 1.2 percent to $73.30. The world’s largest soft-drink maker reported first-quarter profit that topped analysts’ estimates, helped by demand in North America.

Johnson & Johnson (JNJ) rose 0.7 percent to $64.43. The world’s second-biggest maker of health-care products said first-quarter profit rose 1.2 percent on cost cutting and demand for new medicines. The company raised its full-year forecast.

First Solar Inc. (FSLR) gained 6 percent to $22.07 as it plans to cut about 2,000 jobs, representing about 30 percent of its work force, as part of a restructuring in response to deteriorating market conditions in Europe.

2012 Peak

The S&P 500 may have hit its 2012 peak and started a drop of as much as 12 percent, Piper Jaffray Cos. said, citing trend lines and a decline in stocks setting new highs.

The S&P 500 has lost 3.5 percent since reaching an almost four-year high on April 2, sinking below its average during the past 50 days and breaking an uptrend line that extends from lows in October and December. Indicators that the Minneapolis-based firm uses to track the number of groups making new highs and above a 200-day moving average sent sell signals for the first time in a year.

Craig W. Johnson, a technical market strategist with Piper Jaffray, said he expects the S&P 500 to approach 1,250 to 1,275, near its 200-day average. That would erase half of the index’s 320-point gain from its October low through early April. The index reached its 2012 high of 1,419.04 on April 2 and closed at 1,369.57 yesterday.

“The overall internals and breadth are deteriorating,” Johnson said in a telephone interview yesterday. “The highs for the year have been made in.” He expects the S&P 500 to end the year at 1,350.

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