BLBG: U.S. Stock-Index Futures Rise as Retail Sales Increase
U.S. stock-index futures rose, erasing earlier losses, after government data showed retail sales increased in February by the most in five months, bolstering optimism in the world’s largest economy.
Oracle Corp. gained 1.1 percent as Canaccord Genuity Corp. upgraded the software maker. Coach Inc. (COH) added 2.6 percent as Citigroup Inc. raised its rating. Spectrum Pharmaceuticals Inc. (SPPI), a maker of cancer medicines, plunged 36 percent after saying sales will miss analysts’ estimates.
Standard & Poor’s 500 Index (SPX) futures expiring in June rose 0.1 percent to 1,548.4 at 8:57 a.m. in New York. Contracts on the Dow Jones Industrial Average added 5 points, or less than 0.1 percent, to 14,391. The gauge reached another record high yesterday.
“The economy continues to do OK, the consumer continues to spend,” David Katz, who oversees about $825 million as chief investment officer at New York-based Matrix Asset Advisors Inc., said in a phone interview. “You have a favorable environment for stocks and the economy, and as a result you’ve had a nice upward bias. Various data points have helped move the stock market higher.”
The 1.1 percent advance in retail sales was more than forecast and followed a revised 0.2 percent gain in January, Commerce Department figures showed today in Washington. The median projection in a Bloomberg survey called for a 0.5 percent advance. Sales excluding the volatile categories of automobiles and gasoline climbed 0.4 percent.
Household Wealth
Progress in the job market is shoring up sentiment and spurring demand at merchants including Costco Wholesale Corp., easing the burden of a two percentage-point increase in the levy that funds Social Security. The boost to household wealth from home values and stock prices has also helped consumers maintain spending in the face of higher fuel prices.
The S&P 500 fell yesterday after a seven-day winning streak that drove the index within nine points of its all-time high. The benchmark gauge has more than doubled from its bottom in 2009 as the rally was fueled by corporate earnings that topped estimates and monetary stimulus from the Federal Reserve. The Dow rose for an eighth straight day yesterday, its longest stretch of gains in two years.
The S&P 500 is valued at 15.3 times reported earnings, a 22-month high, according to data compiled by Bloomberg. That’s still 7.3 percent below an average of 16.6 over the last decade. The Dow is trading at a price-to-earnings ratio of 14.1, the highest level in almost two years and 11 percent below its 10- year average of 15.8.
Oracle, Coach
Oracle (ORCL) climbed 1.1 percent to $35.82. Canaccord Genuity raised its rating on the shares to buy from hold, with a 12- month price estimate of $42.
Coach, the largest U.S. luxury handbag maker, added 2.6 percent to $50.10 after Citigroup upgraded the shares to buy from hold.
Spectrum Pharmaceuticals tumbled 36 percent to $7.90 as the Henderson, Nevada-based drugmaker said 2013 revenue will be $160 million to $180 million. Analysts had anticipated total sales of $297 million, according to the average of five estimates compiled by Bloomberg.
The rally that pushed the S&P 500 toward a record is poised to pause after faltering yesterday, judging by trading patterns, according to DZ Bank AG.
The five-day relative-strength index for the benchmark, representing the number of trading days in a week, was 74.6 yesterday after reaching 84.8 the day before. The index measures the velocity of price changes to identify overbought or oversold conditions and turning points. Readings above 70 indicate prices will probably fall.
“The RSI is just starting to turn down,” said Andy Cossor, a Hong Kong-based strategist at Germany’s fourth-largest lender. “The S&P 500 has had a good run this year, and it looks as if it needs to take a breath.”
To contact the reporters on this story: Sarah Pringle in New York at springle1@bloomberg.net; Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net
To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net
