BLBG: U.S. Stock-Index Futures Drop on Retail Sales, Earnings Concern
U.S. stock futures slid as retail sales unexpectedly decreased in April, companies from ING Groep NV to Applied Materials Inc. reported disappointing earnings and the Bank of England said the U.K. economy faces a slow recovery.
Fortune Brands Inc. and Walt Disney Co. retreated after the Commerce Department said purchases at U.S. stores decreased 0.4 percent in April and more than previously estimated in March. Citigroup Inc. and Bank of America Corp. lost at least 2.6 percent after ING, the largest Dutch financial-services company, reported a third straight quarterly loss. Applied Materials, the top maker of chip-production machines, slipped 1.8 percent.
“It’s a clear indication that the market had gotten ahead of itself in thinking we were coming out of this recession aggressively,” said Peter Jankovskis, who helps manage $1.2 billion at OakBrook Investments in Lisle, Illinois. “We’re not going to be retesting the low of March 9 by any stretch of the imagination, but some retracement of the gains since that time is certainly in order.”
Futures on the S&P 500 expiring in June fell 1.7 percent to 891.5 at 8:51 a.m. in New York. Dow Jones Industrial Average futures dropped 1.5 percent to 8,308. Nasdaq-100 Index futures retreated 1.5 percent to 1,364.
Most U.S. stocks fell yesterday as share sales at Ford Motor Co., U.S. Bancorp and Anadarko Petroleum Corp. heightened concern earnings will be diluted by capital-raising efforts.
The S&P 500 last week rose 5.9 percent, erasing this year’s loss, as results from the government’s stress tests of banks reassured investors and the pace of job cuts slowed in April. The measure’s 37 percent jump from March 9 through May 8 is the most over similar spans since the 1930s.
AAA Concern
The U.S.’s AAA debt rating may be cut because the government can’t control spending, David Walker, chief of the Peter G. Peterson Foundation and former U.S. comptroller general, wrote in the Financial Times newspaper.
The S&P 500 is up 0.6 percent in 2009 after tumbling 38 percent last year, its worst annual return since the Great Depression. The index is valued at 14.78 times reported earnings of its companies, near the highest level since October.
Earnings per share decreased 37 percent on average for the 435 companies in the S&P 500 that reported first-quarter results since April 7, according to data compiled by Bloomberg. The quarter is the seventh straight period of declining profits, the longest streak on record.
