In the U.S.: U.S. Stock-Index Futures Advance as Europe Concern Eases

2 October 2012

“Sentiment is getting pretty optimistic.” Let’s see how long it lasts this time.

U.S. stock futures advanced, indicating the Standard & Poor’s 500 Index will post its first back-to-back gains in more than two weeks, as concern about Europe’s debt crisis eased.

Citigroup Inc. and Bank of America Corp. (BAC) increased more than 1.4 percent to lead advances among financial shares. PetSmart Inc. (PETM) gained 2.8 percent as the pet retailer will replace Sunoco Inc. in the benchmark S&P 500. Apple Inc. (AAPL) added 0.8 percent.Mosaic Co. (MOS) dropped 2.6 percent after reporting earnings that missed estimates.

S&P 500 futures expiring in December climbed 0.5 percent to 1,444.2 at 8:28 a.m. in New York. The benchmark gauge gained 0.3 percent yesterday as a measure of U.S. manufacturing beat forecasts. Dow Jones Industrial Average futures advanced 44 points, or 0.3 percent, to 13,481 today.

“Sentiment is getting pretty optimistic,” James Gaul, a portfolio manager at Boston Advisors LLC which oversees about $2.2 billion in assets, said in a phone interview. “We’re seeing some strength on the news that Spain may seek bailout funds.Australia cut their interest rates and that’s generally considered supportive to markets.”

Spain’s 10-year bonds advanced for a fourth day, the longest streak of gains in three weeks, amid speculation the nation is preparing to seek a sovereign bailout that will trigger European Central Bank purchases of its debt. Spanish regional presidents meet in Madrid today after Economy Minister Luis de Guindos said yesterday the nation is pressing on with its analysis of whether to seek a bailout.

The Reserve Bank of Australia cut its benchmark interest rate by a quarter percentage point to 3.25 percent, the lowest level since 2009, joining central banks around the world in taking steps to boost growth.

Financial companies advanced today. Citigroup gained 1.4 percent to $33.22 as the stock was raised to outperform, meaning investors should buy the shares, from market perform at KBW Inc. Bank of America added 1.6 percent to $9.10.

PetSmart gained 2.8 percent to $69.45. The Phoenix-based company will be added to the S&P 500 after the close of trading on Oct. 4, according to a statement from the index provider. Sunoco, the Philadelphia-based oil refiner, is being acquired by Energy Transfer Partners LP on or about that date, S&P said.

Apple rose 0.8 percent to $664.44. The world’s most valuable company lost 1.2 percent yesterday, after tumbling 4.7 percent last week. The shares are still up 63 percent in 2012.

Mosaic declined 2.6 percent to $56.50. The fertilizer producer reported fiscal first-quarter profit and revenue that missed analysts’ estimates after prices and volumes declined.

Fifth & Pacific Cos. (FNP) plunged 13 percent to $11.18. The owner of fashion labels including Kate Spade and Lucky Brand cut its profit forecast because of sliding sales of its Juicy Couture line.


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