U.S. stock-index futures rose after a 5 percent drop for the Standard & Poor’s 500 Index last week took the gauge to its cheapest valuation since March 2009. Goldman Sachs Group Inc. gained 2.8 percent in Europe after the stock was upgraded to “overweight” at JPMorgan Chase & Co., which said the bank may not need new money as capital requirements increase. Citigroup Inc. and Bank of America Corp. rose before a report that may show services expanded for a sixth straight month in June. Futures on the S&P 500 expiring in September climbed 0.8 percent to 1,022.5 as of 10:15 a.m. in London. The S&P 500 fell every day last week and didn’t trade yesterday because of the Independence Day holiday. Dow Jones Industrial Average futures gained 0.8 percent to 9,668, while Nasdaq-100 Index futures increased 1.1 percent to 1,739.25. The S&P 500 plunged last week after reports showed a slowdown in manufacturing, weakness in housing and slower-than- estimated growth in jobs, fanning concern that the economy may stall. The decline pushed the benchmark gauge to its cheapest valuation relative to projected earnings since March 2009, when the measure began an 80 percent rally. “The recent selling has made a few bulls sit up and take notice,” said Angus Campbell, head of sales at Capital Spreads in London. Economic data are still “all suggesting expansion. There’s nothing yet that consistently indicates that we will have a double-dip recession.” Dent Growth The S&P 500 is now valued at 12.5 times estimated profits, according to Bloomberg data, after falling 12 percent last quarter. The index has tumbled 16 percent from this year’s high on April 23 on concern a sovereign-debt crisis in Europe and China’s moves to slow the world’s largest emerging economy will dent global growth. Analysts are raising earnings estimates for U.S. companies at the fastest rate since at least 2004 just as stocks post the biggest losses in 16 months on concern that the economy will sink back into a recession. Profit for S&P 500 companies will jump 34 percent in 2010, compared with a projected gain of 27 percent on March 29, according to more than 8,000 estimates compiled by Bloomberg. Service industries in the U.S. expanded in June at a slower pace, indicating the economy started to cool entering the second half, economists said before a report at 10 a.m. New York time today. The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the economy, fell to 55 from 55.4 in May, according to the median forecast of 59 economists surveyed by Bloomberg News. Readings above 50 signal expansion. Goldman Sachs gained 2.8 percent to $134.8 in Germany. JPMorgan upgraded the stock from “neutral” as it analyzed the effect of potential changes to capital regulation. Goldman Sachs is “best in class” in allocating capital per unit and managing risk, JPMorgan wrote in a report. Citigroup, the U.S. bank with more than 200 million clients, gained 1.6 percent to $3.85 in Germany. Bank of America added 1.7 percent to $14.08. To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.

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