In the U.S.: Stock-Index Futures Rise on EU Pact

31 January 2012

Stocks likely to rally this morning with agreed upon austerity measures. More than 67% of S&P 500 companies (that have reported) beat earnings per share estimates.

U.S. stock-index futures rose, indicating the Standard & Poor’s 500 Index will extend its best start to the year since 1997, as European Union leaders agreed to tighter budget controls.

Eli Lilly & Co. (LLY) gained 1.5 percent after posting fourth- quarter profit excluding one-off items that beat analyst estimates compiled by Bloomberg.

Futures on the S&P 500 expiring in March climbed 0.4 percent to 1,314.6 at 7:23 a.m. in New York. Dow Jones Industrial Average futures expiring the same month advanced 58 points, or 0.5 percent, to 12,660.

The S&P 500 has posted four weeks of gains, bringing the rally on the gauge this month to 4.4 percent, driven by the Federal Reserve’s plan to keep interest rates low through at least late 2014 and better-than-estimated earnings. That’s the gauge’s biggest advance in January since 1997.

“Most market participants will raise their glasses to usher out what has proved to be a decent January for performance, data and sentiment,” said Jim Reid, a global strategist at Deutsche Bank AG in London.

Of the 178 S&P 500 companies that have reported results since Jan. 9, 120 have posted per-share earnings that beat projections, according to data compiled by Bloomberg.

EU Budget Rules

EU leaders, meeting in Brussels yesterday, completed a fiscal-discipline treaty that speeds sanctions on high-deficit states, requiring euro countries to anchor balanced-budget rules in national law. Eight countries outside the euro area backed the pact, while the U.K. and the Czech Republic boycotted it.

The policy makers, attending the 16th summit in two years, also agreed to bring the region’s permanent bailout fund, the European Stability Mechanism, into operation on July 1, a year ahead of schedule.

U.S. house prices in 20 cities probably fell at a slower pace in the year to November, pointing to limited improvement in the residential real-estate market, economists said before a report at 9 a.m. New York time today.

The S&P/Case-Shiller index of property values in 20 cities dropped 3.3 percent, its smallest decline in 10 months, according to the median forecast of 30 economists surveyed by Bloomberg News. The measure decreased 3.4 percent in the year to October. Consumer confidence in January climbed to the highest level since February 2011, another report may show.

Eli Lilly Advances

Eli Lilly gained 1.5 percent to $39.85 in German trading. The company reported profit excluding one-off items of 87 cents a share, beating the 81-cent average of 17 analyst estimates compiled by Bloomberg.

Hologic Inc. (HOLX) jumped 7.1 percent to $20.56 in after-hours New York trading yesterday after the Bedford, Massachusetts- based maker of x-ray systems raised its 2012 profit forecast to as much as $1.38 a share. That exceeded the average analyst estimate of $1.36 a share.

RadioShack Corp. (RSH) slumped 23 percent to $7.84 in early New York trading today. The consumer-electronics retailer suspended share repurchases and reported preliminary fourth-quarter earnings that trailed analysts’ estimates. Earnings probably fell to 11 cents to 13 cents a share last quarter. Analysts had projected 37 cents, according to the average of 19 estimatescompiled by Bloomberg.


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