In the U.S.: U.S. Stock Futures Rise Before Bernanke’s Testimony

17 July 2012


U.S. stock futures rose, signaling the Standard & Poor’s 500 Index will rebound from its seventh drop in eight days, amid bets Federal Reserve Chairman Ben S. Bernanke will hint at more stimulus during testimony to Congress.

Goldman Sachs Group Inc. (GS) rose 1.9 percent after reporting second-quarter profit that exceeded analysts’ estimates and selling its hedge-fund administration unit to State Street Corp.Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) climbed at least 0.5 percent.Yahoo (YHOO)! Inc. advanced 1.6 percent after the company that owns the biggest U.S. web-portal named Marissa Mayer as chief executive officer.

S&P 500 futures expiring in September gained 0.4 percent to 1353.1 as of 9:12 a.m. in New York. The U.S. equity benchmark lost 0.2 percent yesterday. Dow Jones Industrial Average futures added 51 points, or 0.4 percent, to 12,699 today.

“The market is looking for the Fed chairman to be fairly definitive,” Jim Russell, the Cincinnati-based chief equity strategist at U.S. Bank Wealth Management, which oversees about $103 billion, said in a phone interview. “Certainly the CPI numbers give the Fed ample room to be even more accommodative than what they’ve done before. They have room to be aggressive.”

U.S. Inflation

The cost of living in the U.S. was little changed in June, a sign inflation may stay subdued as Fed officials have predicted. No change in the consumer-price index followed a 0.3 percent drop in May, a Labor Department report showed today in Washington. The measure matched the median forecast of economists in a Bloomberg News survey. The so-called core measure that excludes volatile food and fuel costs rose 0.2 percent for a fourth month.

Bernanke will deliver his semi-annual report on the economy and monetary policy before Congress today and tomorrow. Data yesterday showing a contraction in June retail saleskindled speculation the Fed will introduce more measures to support the world’s largest economy.

Minutes from the Fed’s June meeting, released on July 11, showed that two participants supported additional bond purchases, while two others said only a further deterioration in the economy would warrant them.

“Stocks are being helped by expectations about Bernanke’s testimony to Congress later today,” said Jakup Petur Baerentsen, a chief equity adviser at Nordea Private Bank in Copenhagen. “Investors are speculating if he’ll hint a third round of quantitative easing”

Economy Watch

At 9:15 a.m., Fed figures may show industrial production increased 0.3 percent in June after a 0.1 percent drop the prior month, according to the median estimate in a Bloomberg survey.

The Citigroup Economic Surprise Index for the U.S., which measures how much data from the past three months is beating or missing the median estimates in Bloomberg surveys, is at minus 64, near the almost 11-month low of minus 64.9 reached last week. The gauge peaked at 91.9 in January.

Earnings (SPX) beat estimates at 31 of the 44 companies in the S&P 500 that have reported quarterly results so far, data compiled by Bloomberg showed.

“The earnings progression in the second quarter looks pretty good,” Russell said. “We heard from the financial companies and Goldman Sachs was notable.”

Goldman Sachs

Goldman Sachs climbed 1.9 percent to $99.56. The fifth- biggest U.S. bank by assets reported an 11 percent drop in earnings that beat analysts’ estimates on trading even as first- half revenue fell to the lowest since 2005. State Street Corp., the third-largest custody bank, bought Goldman’s hedge-fund administration unit for $550 million.

JPMorgan, the largest U.S. bank, rose 0.5 percent to $35.28, while Bank of America, the second-biggest, advanced 0.9 percent to $7.88.

Yahoo rallied 1.6 percent to $15.90 after the company appointed Mayer as its fifth CEO in four years as it seeks to stem user defections and market-share losses that have contributed to three years of revenue declines.

Coca-Cola Co. (KO) advanced 1.8 percent to $77.83 after the world’s largest soft-drink maker reported second-quarter profit that topped analysts’ estimates, helped by pricing increases inNorth America late last year.

Mattel Inc. (MAT) jumped 6.5 percent to $33.05 after reporting second-quarter profit was 28 cents a share, exceeding the average analyst estimate by 7 cents.

Mosaic Co. (MOS) climbed 2.4 percent to $56.70. The second most- valuable North American fertilizer producer doubled its dividend and posted fourth-quarter earnings that beat analysts’ estimates after an extended spring season.


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