In the U.S.: U.S. Stock Futures Rise; S&P 500 May Snap Six-Day Slide

21 May 2012

As G8 leaders seek to resolve European crisis, eyes turn toward China and the U.S. for growth.

U.S. stock-index futures advanced, indicating the Standard & Poor’s 500 Index will rebound from a four-month low, as China’s Premier Wen Jiabao pledged to boost growth in the world’s second-largest economy.

Yahoo! Inc. (YHOO) climbed 5.4 percent in early New York trading after agreeing to sell a 20 percent stake in Alibaba Group Holding Ltd. back to China’s largest e-commerce provider.Google Inc. (GOOG) gained after winning approval from Chinese regulators for its $12.5 billion purchase of Motorola Mobility Holdings Inc. Facebook (FB) Inc. was little changed.

S&P 500 futures expiring in June rose 0.7 percent to 1,299.5 at 7:38 a.m. in New York. The index has tumbled for three straight weeks amid concern global economic growth is slowing and Greece will have to leave the euro area. Contracts on the Dow Jones Industrial Average gained 74 points, or 0.6 percent, to 12,409 today.

“Europe is in such a bad state that we can only rely on the U.S. or on China to boost global growth,” said Jean-Paul Jeckelmann, who helps manage $1.4 billion in equities as chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland. “Any sign that one or the other move into that direction is clearly a market positive.”

The S&P 500 has retreated 8.7 percent since this year’s high on April 2 as Greece’s political parties failed to form a government, increasing the chance the nation won’t meet its debt obligations. The gauge has now increased 3 percent in 2012, after having climbed as much as13 percent.

Focus on Growth

In China, Wen called for “putting stabilizing growth in a more important position” and didn’t mention concern about inflation in remarks published yesterday by the official Xinhua News Agency. China may announce stimulus actions in the near term, according to a front-page commentary today in the China Securities Journal, which is published by Xinhua.

In Europe, German and French leaders meet this week to map out a revised plan for the euro as the Group of Eight exposed disagreement on a rescue strategy, Greece lurched toward a possible exit and Spain’s budget deficit widened.

U.S. employment will improve more this year than economists had estimated, helping the world’s largest economy to keep growing, a private survey showed.

Payrolls will rise 188,000 a month on average in 2012, up from a February projection of 170,000, according to the results of a survey by the National Association for Business Economics issued today in Washington. Unemployment will average 8 percent in the fourth quarter, little changed from the three-year low of 8.1 percent reached last month.

Reagan Returns

With only six months before the election, the stock market is giving President Barack Obamathe worst returns since Ronald Reagan sought a second term. The S&P 500 has risen 1.3 percent since Mitt Romney’s campaign began 12 months ago, compared with average gains of 12 percent for incumbents who won re-election starting with Harry S. Truman, according to Bloomberg data.

Yahoo climbed 5.4 percent to $16.25. The U.S. Web portal will receive at least $6.3 billion in cash and as much as $800 million in newly issued Alibaba preferred stock for the stake in the Hangzhou, China-based company.

Google gained 1.2 percent to $607.35 in early New York trading as China’s approval for its purchase of Motorola Mobility cleared a final hurdle for a deal that boosts its patents portfolio and steps up competition with Apple Inc.

Coach, Facebook

Coach Inc. (COH) rose 1 percent to $66.52 in German trading after its Chief Executive Officer Lew Frankfort said he sees a soft landing in China’s economy and he’s set on strengthening Coach’s business in the nation and other non-U.S. markets, Barron’s reported, citing an interview.

Facebook was little changed at $38.23 in early New York trading after the eight-year-old social-networking site run by co-founder Mark Zuckerberg closed 0.6 percent higher on its first day of trading on May 18.

BlackRock Inc. (BLK) lost 2 percent to $168.50 after Barclays Plc said it plans to sell its entire 19.6 percent stake in the company for $6.1 billion. BlackRock will buy back as much as $1 billion of the shares.

DaVita Inc. (DVA), a provider of kidney-dialysis services, may move after it agreed to acquire HealthCare Partners, an operator of medical groups and physician networks, in its biggest deal since at least 1995.


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