BLBG: U.S. Stock Futures Fluctuate on Jobless Claims, Libor Decline
U.S. stock-index futures swung between gains and losses as a bigger-than-estimated increase in jobless claims tempered speculation that governments are succeeding in efforts to stimulate lending.
Futures on the Standard & Poor’s 500 Index slipped 0.2 percent to 883.5 at 8:46 a.m. in New York after first-time claims for unemployment benefits advanced to 637,000 last week, 27,000 more than estimated by economists. The contract slid as much as 0.7 percent and rose as much as 0.3 percent. Dow Jones Industrial Average futures fell 16 points, or 0.2 percent, to 8,278 and climbed as much as 21 points.
The cost of borrowing in dollars for three months between banks dropped the most in eight weeks as government and central bank efforts to unlock credit markets showed signs of bearing fruit.
The London interbank offered rate, or Libor, for such loans fell almost three basis points to 0.85 percent today, according to the British Bankers’ Association. The Libor-OIS spread, a measure of the unwillingness of banks to offer each other cash, narrowed three basis points to 65 basis points, the lowest level since June 16.
Sixteen stocks fell for each that rose on the New York Stock Exchange yesterday, the broadest sell-off in three weeks. The S&P 500’s 4.9 percent loss over the past three days wiped out most of the rally last week that was driven by speculation the banking industry is improving following the government’s stress tests.
The world economy may face near-stagnation for 10 years similar to Japan’s “lost decade” in the 1990s, Nobel Prize- winning economist Paul Krugman said at a forum today in Taipei. His prediction of a protracted slowdown echoes comments by Citigroup Inc.’s James Wolfensohn, the former World Bank president, and fellow Nobel laureate Joseph Stiglitz.
Earnings at the 439 companies in the S&P 500 that have reported results since April 7 fell 36 percent on average, with 62 percent beating analysts’ forecasts, according to Bloomberg data. Analysts expect a 35 percent slide in second-quarter income and a 23 percent decrease in the third. The consensus is for profits to rebound 69 percent in the last quarter, with financial companies accounting for all of the gain.
