BLBG: U.S. Index Futures Decline After Weekly Gain for Equities
U.S. stock-index futures fell, after equities posted their biggest weekly gain since January 2013, as investors weighed earnings to gauge how well the economy is coping with the cut in Federal Reserve stimulus.
Merck & Co. rose 0.2 percent after posting third-quarter results and narrowing its predicted range for full-year earnings. Sarepta Therapeutics Inc. sank 32 percent after saying regulators require more data on a new drug proposal. The iShares MSCI Brazil Capped exchange-traded fund dropped 9.5 percent after President Dilma Rousseff’s re-election damped speculation for a change in policies that left the economy in recession.
Futures on the S&P 500 expiring in December slid 0.2 percent to 1,955.40 at 8:27 a.m. in New York. Dow Jones Industrial Average contracts lost 27 points, or 0.2 percent, to 16,709 today.
“Earnings will continue to be the focus of investors this week along with any further commentary from the Fed,” said Patrick Spencer, head of U.S. equity sales at Robert W. Baird & Co. in London, in a phone interview. “Earnings so far have been reasonable. The Fed continues to be supportive and we are entering a seasonally strong time of year for the market.”
Thirteen companies listed on the Standard & Poor’s 500 Index including Allergan Inc. and Seagate Technology Plc report quarterly results today.
Earnings Scorecard
Of the S&P 500 (SPX) companies that have reported earnings so far, 80 percent have beaten earnings estimates and 60 percent surpassed revenue projections, according to data compiled by Bloomberg. Profit for the index’s members rose 6.3 percent in the third quarter and sales increased 4.1 percent, analysts predicted.
The S&P 500 surged 4.1 percent last week for its best performance since January 2013, halting a four-week slide amid better-than-estimated earnings and data signaling a strengthening economy even as the Fed prepares to end its bond purchases.
Markets started to turn around on Oct. 16 after St. Louis Federal Reserve Bank President James Bullard said policy makers should consider delaying the end of quantitative easing. The S&P 500 is up more than 5 percent since then, recouping about half of the drop since its record in mid-September.
The Federal Open Market Committee plans to end its purchases of Treasuries and mortgage bonds at the next meeting Oct. 28-29, according to minutes of the last gathering.
A report at 10 a.m. in Washington may show that contracts to purchase previously owned houses increased 1 percent in September, after declining 1 percent the previous month, according to economists surveyed by Bloomberg. Another release may show growth in services activity slowed down this month.
Merck was little changed, erasing earlier gains, after reporting third-quarter profit that beat estimates. The company also said it expects full-year earnings of $3.46 to $3.50 a share, compared with its previous prediction for $3.43 to $3.53.
Halliburton Co. lost 1.2 percent to $55.10 after Goldman Sachs Group Inc. removed the stock from its “conviction buy” list.
To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net
To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Jeremy Herron, Srinivasan Sivabalan
