MW: U.S. Stock Futures Fall After S&P 500 Approaches Record
U.S. stock-index futures fell after a seven-day rally in the Standard & Poor’s 500 Index drove the benchmark equity gauge to within nine points of its record high.
Apple Inc. slumped 1 percent as a Jefferies & Co. analyst cut his price target on the stock. CVS Caremark Corp. slid 1 percent after Goldman Sachs Group cut its rating. Costco (COST) Wholesale Corp., the largest U.S. warehouse-club chain, gained 1.2 percent after second-quarter profit rose 39 percent. Yum! Brands Inc. (YUM) jumped 5.4 percent as the owner of the KFC restaurant chain said Chinese sales fell less than estimated.
S&P 500 (SPX) futures expiring in June retreated 0.1 percent to 1,548.9 at 9:15 a.m. in New York. Contracts on the Dow Jones Industrial Average lost 13 points, or 0.1 percent, to 14,368.
“It’s good news and bad news,” Nathaniel Paull, fund manager and partner at New Amsterdam Partners, said about hitting historic highs in the market. The New York-based firm manages about $2.5 billion. “There’s been certainly a healthy dose of skepticism that the market has been fighting against in this rally, so I couldn’t characterize the market as frothy in any way. That’s helped keep a lid on valuations and things haven’t gotten out of hand.”
The S&P 500 closed yesterday at the highest level since October 2007, while the Dow rose to a record for a fifth straight day. The Chicago Board Options Exchange Volatility Index dropped to the lowest in more than six years.
Bull Market
More than $10 trillion has been restored to U.S. equity values during the four-year bull market as the S&P 500 more than doubled from the bottom in 2009, fueled by corporate earnings that topped estimates and monetary stimulus from the Federal Reserve. The Dow recouped all its losses from the financial crisis in less than 65 months, more than a year faster than the recovery from the Internet bubble.
“We’re reaching the historic triple-top level on the S&P 500 and that’s scaring the market,” said Louis de Fels, a Paris-based fund manager at Raymond James Asset Management International, which oversees $43 billion worldwide. “There is some locking in of profits.”
Apple slumped 1 percent to $433.65. Jefferies analyst Peter Misek cut his price target on the company to $420 from $500, citing delayed iPhone 5S and low-cost iPhone introductions due to problems with new casing colors.
CVS Caremark Corp. slid 1 percent to $52.10. Goldman Sachs cut its rating on the drugstore chain to neutral from buy.
U.S. Silica Holdings Inc. slid 3.9 percent to $25.50. The silica producer said GGC USS Holdings, an affiliate of Golden Gate Capital, will sell 8.5 million shares of the company’s common stock in an underwritten offering.
Costco Rises
Costco advanced 1.2 percent to $103.69. The company said second-quarter net income rose to $547 million, or $1.24 a share. Analysts in a Bloomberg survey had projected profit of $1.06.
Yum Brands climbed 5.4 percent to $71.50. The company said first-quarter same-store sales fell 20 percent in China, less than the 25 percent drop analysts had estimated. Yum, which has more than 5,200 restaurants in China, is trying to revive sales in the country after a probe of a former chicken supplier.
VeriFone Systems Inc. jumped 6.8 percent to $21.85. Douglas Bergeron was dismissed as chief executive officer after missing analysts’ estimates for second-quarter profit amid diminished demand for credit-card terminals. The shares were raised to positive from neutral by Susquehanna International Group equity analyst Meghna Ladha.
Merck & Co. rallied 4.6 percent to $45.66. The company said it is continuing a study of its cholesterol lowering drug Vytorin after an interim review of the data by an outside committee. The announcement “suggests no safety issues,” said Mark Schoenebaum, an analyst with ISI Group in New York, in a note to clients.
To contact the reporters on this story: Sarah Pringle in New York at springle1@bloomberg.net; Adria Cimino in Paris at acimino1@bloomberg.net
To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net
