U.S. stock futures were little changed, indicating the Standard & Poor’s 500 Index may fail to build on its best week in almost two years, before a report on factory orders and further details on a Greek debt rollover.
Google Inc. and SanDisk Corp. gained at least 1 percent as analysts advised buying the shares. Newmont Mining Corp. added 1.4 percent as RBC Capital Markets predicted a potential rally in gold stocks in the second half of 2011.
Futures on the S&P 500 expiring in September fell 0.2 percent to 1,331.60 at 8:38 a.m. in New York. Dow Jones Industrial Average futures expiring the same month lost 4 points, or less than 0.1 percent, to 12,510. Markets were closed for the Independence Day holiday yesterday.
“We’ll look for macro data and see if there is an improvement, which could give us more fuel to the rebound,” said Karim Bertoni, who helps oversee $29 billion at Banque SYZ & Co. in Geneva. “We could also have a pause given last week’s strong performance.”
The S&P rose 5.6 percent last week, the gauge’s largest advance since July 2009. The benchmark measure still fell 1.8 percent in June, spurring the first quarterly loss in a year, on concern that Greece will fail to repay all of its debt and that the U.S. economy will weaken further. Even so, the index has gained 6.5 percent in 2011 through July 1 as government stimulus measures and higher-than-estimated corporate earnings lifted investors’ confidence.
Earnings Season
An unexpected pickup in American manufacturing growth helped ease concern last week that the world’s largest economy is faltering, sending benchmark indexes to their highest levels since May and their biggest weekly gains in two years. Alcoa Inc., the largest U.S. aluminum producer, will be the first Dow company to report second-quarter earnings on July 11.
Companies most tied to economic growth are staging the biggest rally in a year, and their advance may continue after valuations slipped to a two-year low.
The price-earnings ratio for the Morgan Stanley Cyclical Index tracking manufacturers, commodity producers and transportation companies has been 6.7 percent below the multiple for the bank’s measure of drugmakers and food companies, on average since April 29. The discount is the widest since May 2009, two months after the S&P 500 completed a 57 percent drop, its worst decline in almost eight decades.
Factory Orders
The Commerce Department will today publish a report that may show orders placed with factories rebounded 1 percent in May, according to the average estimate of economists polled by Bloomberg. The manufacturing gauge fell in April by the most in almost a year.
S&P said yesterday a French plan to roll over Greek bonds would likely trigger a default rating, repeating assertions made by Fitch Ratings on June 15 about debt rollovers. Moody’s Investors Service hasn’t said what the planned rollover will probably do to the country’s debt rating. Under European Central Bank rules, the best single rating is used to determine collateral eligibility.
Google, the world’s largest Internet-search company, rose 1 percent to $526.10. The shares were raised to “overweight” from “equal weight” at Evercore Partners, which said they may reach $670 as the company grows in social and other product initiatives.
SanDisk Upgrade
SanDisk climbed 2 percent to $43.67. Deutsche Bank AG analysts Bob Gujavarty and Ross Seymore raised their recommendation to “buy” from “hold,” saying profit margins will become “far more sustainable.”
Newmont Mining added 1.4 percent to $54.48. “We are maintaining our weighting for precious metals at overweight as we believe margin expansion, dividend increases and strong seasonal performance could provide catalysts for a rally in gold equities,” RBC analysts wrote in a note to clients dated yesterday.
To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
