BS: S&P 500 Futures Fall on Earnings as Greek Bonds Decline
U.S. equity-index futures fell with European stocks as results by companies from Caterpillar Inc. to Microsoft Corp. (MSFT:US) and Siemens AG disappointed investors. Greek bonds slid for a second day while U.S. natural gas jumped as a snowstorm blanketed the country’s northeast.
Standard & Poor’s 500 Index futures slipped 0.7 percent at 7:43 a.m. in New York. Dow Jones Industrial Average contracts dropped 1.1 percent. The Stoxx Europe 600 Index also lost 0.7 percent, declining from a seven-year high. The euro climbed 0.5 percent to $1.1294. The yield on 10-year Greek debt jumped 34 basis points to 9.43 percent and shares headed for the biggest two-day drop in three weeks. Russian bonds declined and credit risk rose after S&P cut the country’s rating to junk. U.S. natural gas advanced 2.5 percent, paring earlier gains.
Caterpillar, the world’s largest manufacturer of mining and construction equipment, reported profit that missed estimates, while Microsoft’s software-license sales to businesses that trailed (MSFT:US)estimates and Siemens posted a decline in first-quarter profit. Caterpillar Inc. and Apple Inc. are among companies set to release earnings. European finance ministers signaled willingness to work with Greek Prime Minister-elect Alexis Tsipras as long as he drops demands for a debt writedown.
STORY: As Greece Goes, So Goes the Euro
“With Siemens, it’s worrying in the sense that Germany’s an industrial power and a good part of their business is exports,” Jasper Lawler, a market analyst at CMC Markets Plc in London, said by telephone. “There’s going to be a lot of focus on the negotiations between Greece and the Troika. Whenever we hear parties involved making commentary, there’s going to be volatility. It’s adding to the distrust of how the euro zone functions.”
Profit Drop
The Stoxx 600 halted an eight-day winning streak, its longest since April. Greece’s benchmark index slid 3.7 percent, extending declines since Sunday’s elections to 6.9 percent.
Siemens, Europe’s biggest engineering company, retreated 2.9 percent. Royal Philips NV fell 5.9 percent after saying it is behind on its 2016 financial targets.
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EasyJet Plc climbed 2.1 percent after posting an increase in first-quarter revenue, and Novartis AG (NOVN) rose 1.4 percent after posting fourth-quarter profit that beat analysts’ estimates. The world’s biggest drugmaker by sales also said revenue growth will resume this year, with earnings gains exceeding sales increases.
Microsoft lost 5 percent. About 76 percent of the 101 companies in the S&P 500 that have posted earnings this season have beaten analyst estimates, while 53 percent have topped sales projections, data compiled by Bloomberg show.
The yield on five-year Russian government debt rose 30 basis points to 15.55 percent, and the cost of protecting against default increase 12 basis points to 603, near the highest level since 2009, CMA prices show.
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Russia Downgrade
The dollar-denominated RTS slipped 0.7 percent, while the Micex gained 1.9 percent. The ruble advanced 1.6 percent against the dollar after losing 6.6 percent yesterday.
S&P, which last downgraded Russia in April, cut the sovereign one step to BB+, the same level as countries including Bulgaria and Indonesia. The ratings firm said the outlook is “negative.”
The European Union will probably toughen sanctions linked to the conflict in Ukraine, adding more individuals to a list of those facing visa bans and asset freezes rather than impose economic sanctions, Latvian President Andris Berzins, whose country holds the EU’s rotating presidency, said Monday in a Bloomberg interview. The step may take place at a foreign ministers meeting set for Jan. 29 in Brussels, he said.
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Chinese stocks fell for this first time in six days in Shanghai after industrial profits declined the most in at least three years last month. The Shanghai Composite Index lost 0.9 percent after closing at a more than five-year high on Monday. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong dropped 1.6 percent.
China Economy
Industrial profits declined 8 percent from a year earlier, the National Bureau of Statistics said. That’s the biggest drop since at least October 2011, according to data compiled by Bloomberg.
India’s S&P BSE Sensex advanced 0.4 percent to a record high as Prime Minister Narendra Modi and President Barack Obama reached an agreement that could spur nuclear energy projects.
