BLBG: U.S. Stock-Index Futures Decline as News Corp. Retreats
U.S. stock-index futures retreated, indicating the Dow Jones Industrial Average will slip from an all-time high.
News Corp. dropped 2.4 percent in early New York trading after the publisher of the Wall Street Journal reported a decline in revenue. T-Mobile US (TMUS) Inc. retreated 1.9 percent in Germany after offering almost $1.8 billion in new stock.
Futures on the Standard & Poor’s 500 Index expiring in December fell 0.1 percent to 1,765.3 at 7:44 a.m. in New York. The benchmark gauge has surged 24 percent this year, on course for the biggest gain since 2003. Dow Jones Industrial Average contracts lost 9 points, less than 0.1 percent, to 15,714 today.
“After such a strong rally I’m hearing calls for a correction,” Patrick Spencer, London-based head of U.S. equity sales at Robert W. Baird & Co., said in a phone interview today. “A lot of investors are taking a breather and everywhere you look I am reading different reasons why this rally can’t last.”
The S&P 500 and the Dow average have touched records this quarter as the Federal Reserve refrained from curbing its asset-purchase program and economic reports and earnings releases beat forecasts. Investors will scrutinize data this week on jobless-benefit claims and manufacturing in the New York area.
Close Books
“A lot of U.S. financial firms will start to close their books for the year now after this decent performance,” said Ioan Smith, a market strategist at KCG Europe Ltd. In London. “If you’ve had good returns and you outperformed, how much more are you going to get this year? There is a big argument to lock in what gains you’ve got given the risk-reward is not conducive of any significant gains from these levels.”
In China, top Communist Party party officials concluded a four-day meeting to map out a blueprint for reform. China will deepen economic reforms and give markets a bigger role in allocating resources, the official Xinhua News Agency reported today, citing a communique from the gathering.
Seventy-five percent of the 450 S&P 500 companies that have reported earnings so far this period have beaten analysts’ estimates, according to data compiled by Bloomberg.
“Earnings have been reasonable and the outlook for corporate growth next year is decent,” Spencer said. “The market traditionally goes up in November and December. I am reasonably optimistic and still believe equities are the place to be.”
News Corp.
News Corp. (NWSA) slid 2.4 percent to $17 as the publisher reported a 2.8 percent decline in first-quarter revenue, hurt by shrinking demand for print advertising.
Sales fell to $2.07 billion in the period ended Sept. 30, down from $2.13 billion a year earlier, the New York-based company said in a statement yesterday. Analysts had estimated $2.18 billion, according to data compiled by Bloomberg.
T-Mobile US dropped 1.9 percent to $26.46 in Germany. The fourth-largest mobile-phone carrier in the U.S. plans to sell 66.2 million shares in a secondary offering, raising money that could be used to acquire wireless spectrum.
Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., Credit Suisse Group AG and Deutsche Bank AG are managing the offering, which is valued at almost $1.8 billion based on yesterday’s closing price, according to a statement. T-Mobile will grant the underwriters the option to buy as many as 6.62 million additional shares.
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
