BLBG: U.S. Index Futures Gain on Fed Bets After 3-Day Slump
U.S. stock futures advanced, indicating the Standard & Poor’s 500 Index will rebound from a three-day slump, amid speculation the Federal Reserve will remain supportive of the economy even as policy makers gear up for an interest-rate increase.
Bank of America Corp. climbed at least 1 percent to lead gains among banks. Apple Inc. increased 0.7 percent. FedEx Corp. slipped 4.3 percent after the company reported fiscal second-quarter earnings that fell short of analyst estimates. United Parcel Service Inc. lost 1.4 percent.
Futures on the S&P 500 expiring in March added 0.6 percent to 1,977 at 8:34 a.m. in New York. Dow Jones Industrial Average contracts rose 80 points, or 0.5 percent, to 17,087 today.
“In the U.S. there’s some pivoting over the ‘considerable time’ phrase,” Michael Ingram, a market strategist at BGC Brokers LP in London, said by phone. “It won’t be replaced with nothing. There’s some feeling that they’ll keep some of that language in there, and the futures are seeing some support from that. It is also a bounce because the U.S. has been down a bit harder in the last couple of days.”
The Fed ends a two-day meeting today, with economists predicting plunging oil prices won’t stop policy makers from dropping a vow to keep interest rates low for a “considerable time.” Officials are gearing up for a 2015 interest rate increase by dropping the language from their statement and replacing it with a different term such as “patient” to describe its approach to policy, according to 68 percent of economists in a Bloomberg News survey.
Fed Statement
The Federal Open Market Committee releases its policy statement along with quarterly economic projections at 2 p.m. today in Washington. Fed Chair Janet Yellen will holds a press conference at 2:30 p.m.
The consumer-price index dropped 0.3 percent, the most since December 2008, after being little changed the prior month, a Labor Department report showed today in Washington. The median forecast of 84 economists surveyed by Bloomberg called for a 0.1 percent fall. Costs rose 1.3 percent over the past year, the least since February. Excluding volatile food and fuel, the so-called core measure rose at a slower pace than in October.
The S&P 500 has dropped 5 percent from a record on Dec. 5, as a slide in crude prices and signs of a worldwide economic slowdown rippled through financial markets.
Investors have seen the wildest fluctuations in U.S. stocks since October, with the Chicago Board Options Exchange Volatility Index at the highest since Oct. 16. The S&P 500 yesterday fell 0.9 percent as a sell-off in technology shares overshadowed gains in oil producers.
Oil Prices
Crude oil has slumped to a five-year low as the Organization of Petroleum Exporting Countries seeks to defend market share while a U.S. shale oil boom exacerbates a global glut. At the same time, the U.S. Congress is talking about allowing unfettered oil exports for the first time in almost four decades, potentially swelling supplies even more.
FedEx lost 4.3 percent after quarterly profit missed analysts’ estimates as the operator of the world’s largest cargo airline spent more on aircraft maintenance and collected less in fuel surcharges.
Volcano Corp. jumped 55 percent after Royal Philips NV agreed to buy the diagnostic equipment maker for $1 billion. Shareholders of Volcano will receive $18 a share in cash, Philips said in a statement.
Cliffs Natural Resources Inc. retreated 12 percent. The biggest U.S. iron-ore producer will need to be recapitalized within the next two years and near-term earnings aren’t sufficient to support its debt load, Credit Suisse Group AG analysts said. The broker cut its share-price target to $1 from $10.
To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net
To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net; Cecile Vannucci at cvannucci1@bloomberg.net Trista Kelley
