BLBG:U.S. Stock Futures Drop as Retail Sales Unexpectedly Fall
U.S. stock futures fell, signaling the Standard & Poor’s 500 Index will decline from a record, as government data showed retail sales unexpectedly fell in March by the most in nine months.
JPMorgan Chase & Co. (JPM) and Well Fargo & Co. slid at least 0.8 percent after reporting first-quarter earnings. Harris Corp. slid 7.4 percent after forecasting revenue that missed analysts’ estimates. J.B. Hunt Transport Services Inc. lost 2.8 percent after posting first-quarter earnings that missed projections. Netflix Inc. jumped 1.9 percent as the world’s largest online subscription video service said viewing surpassed 4 billion hours in the last three months.
S&P 500 futures expiring in June retreated 0.5 percent to 1,579.3 at 8:35 a.m. in New York. Contracts on the Dow Jones Industrial Average fell 62 points, or 0.4 percent, to 14,734. The benchmark indexes closed at all-time highs yesterday as retailers rose and jobless claims fell more than estimated.
“We are a bit concerned that U.S. equities have gone too far too quickly,” Nick Skiming, who helps manage about $2 billion at Ashburton Ltd. in Jersey, the Channel Islands. “We’ve seen some slightly softer economic data in the last couple of weeks. We are positive on U.S. equities but a 5 percent correction would be healthy.”
The 0.4 percent decrease in U.S. retail sales, the biggest since June, followed a 1 percent gain in February, Commerce Department figures showed today in Washington. The median forecast of 85 economists surveyed by Bloomberg called for an unchanged reading in March. Department stores and electronics dealers were among the weakest showings.
Consumer Confidence
In a separate survey due later today, economists forecast the Thomson Reuters/University of Michigan gauge of consumer sentiment was little changed in April from the prior month, at 78.5. March’s reading of 78.6 was the highest since November.
Euro-area finance ministers met in Dublin today, discussing loan extensions for Ireland and Portugal. Cyprus President Nicos Anastasiades will seek an increase to the nation’s 10 billion- euro ($13 billion) bailout from the European Union, according to a government official, who asked not to be identified.
The bull market in U.S. equities entered its fifth year last month. The S&P 500 has surged 136 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy.
The Dow’s rally may slow after the gauge passed a technical level, according to Meritz Securities Co. The 14-day relative- strength index for the gauge rose to 71.9 yesterday, according to data compiled by Bloomberg. Readings above 70 signal to some analysts prices will probably reverse direction.
Earnings Season
Profits at S&P 500 (SPX) companies dropped 1.8 percent in the first three months of the year, according to analyst estimates compiled by Bloomberg. That would mark the first year-over-year decrease since 2009.
Banks slipped today even as JPMorgan and Wells Fargo posted results that topped analyst estimates.
JPMorgan fell 0.8 percent to $48.94. First-quarter profit rose 33 percent as improving consumer credit quality allowed the bank to cut loan-loss reserves by $1.2 billion. While mortgage volume jumped 37 percent, mortgage-banking net income dropped 31 percent. The largest U.S. bank by assets said 2013 net interest income will be 1 percent lower than the year-earlier period.
Wells Fargo dropped 1.6 percent to $36.90. The largest U.S. home lender posted a 22 percent rise in first-quarter profit that beat forecasts as the company curbed expense growth.
Harris Falls
Harris plunged 7.4 percent to $43.11 as the maker of military radios said in a statement it expects third-quarter sales of about $1.2 billion, missing the average analyst estimate of $1.32 billion. Earnings from continuing operations will be $1.12 per share, Harris said, compared with the $1.26 projected by analysts in a Bloomberg survey.
J.B. Hunt declined 2.8 percent to $72.11 after the truckmaker posted first-quarter earnings of 61 cents a share, compared with the 64 cents estimated by analysts in a Bloomberg survey.
Netflix jumped 1.9 percent to $176.25. Chief Executive Officer Reed Hastings wrote on his page on Facebook Inc.’s social-media service that viewing surpassed 4 billion hours in the latest quarter. The post prompted a research note from BTIG LLC’s Rich Greenfield titled: “Is Netflix Now the Most Watched ‘Cable Network’ on Television? 87 Minutes Per Household Per Day.”
To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net
To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net
