BLBG: U.S. Stock-Index Futures Slip as Investors Weigh Stimulus
U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will decline for the sixth time in eight days, as investors speculated on the Federal Reserve’s stimulus plans amid signs the global economy is strengthening.
Macy’s Inc. fell 2.8 percent as the department-store chain cut its profit forecast after weaker-than-estimated quarterly sales. Cree Inc. tumbled 17 percent after forecasting lower first-quarter profit than analysts had anticipated. Deere & Co. added 0.8 percent after lifting its earnings forecast.
Futures on the S&P 500 expiring in September fell 0.2 percent to 1,686.7 at 8:37 a.m. in New York. The gauge has slipped 0.9 percent since closing at an all-time high on Aug. 2. Contracts on the Dow Jones Industrial Average declined 40 points, or 0.3 percent, to 15,371 today.
“The U.S. markets are in a limbo at the moment during the summer period,” Didier Duret, chief investment officer for ABN Amro Private Banking, which manages 165 billion euros ($219 billion), said by phone from Amsterdam. “It’s had a great run and volumes aren’t particularly large. Many people are away and, by September, people will start investing with 2014 in mind.”
U.S. equities rose yesterday, halting a two-day decline, after Commerce Department data showed retail sales increased 0.2 percent in July, following a 0.6 percent gain in June that was larger than previously reported.
Fed Stimulus
The S&P 500 has fallen for five of the past seven days amid growing speculation the Fed will pare stimulus this year as the economy strengthens. The central bank will probably reduce its $85 billion in monthly bond purchases at its meeting on Sept. 17-18, according to 65 percent of economists surveyed by Bloomberg from Aug. 9 to Aug. 13. In a survey last month, half of economists predicted a reduction at next month’s meeting.
Fed tapering “is the big debate,” Duret said. “It started around mid-May and it’ll continue to roll on for quarters. It’s a good real-life test of how the Fed wants to engineer the normalization.”
A report today showed wholesale prices in the U.S. were little changed in July, reflecting the biggest drop in auto costs in four years. The steady reading in the producer price index followed a 0.8 percent gain in June, a Labor Department report showed today in Washington. The median estimate in a Bloomberg survey of 73 economists projected a 0.3 percent rise.
Separate data today showed the euro area’s economy emerged from a record-long recession in the second quarter, led by Germany and France. Gross domestic product expanded 0.3 percent after a 0.3 percent contraction in the first quarter, the European Union’s statistics office said. That exceeded the median estimate of 0.2 percent growth in a Bloomberg survey of 41 economists.
Macy’s, Cree
Macy’s fell 2.8 percent to $47.15. The department-store chain cuts its full-year profit forecast after “softer than anticipated” sales in the second quarter amid “continuing uncertainty about spending on discretionary items.”
Cree plunged 17 percent to $63.10. The maker of energy-efficient lighting products predicted earnings in the first quarter will be no more than 41 cents a share, missing the average analyst estimate by 2 cents. The Durham, North Carolina-based company also posted fourth-quarter profit that matched projections and sales that fell short of forecasts.
Deere increased 0.8 percent to $84.60. The world’s largest farm-equipment maker raised its full-year earnings forecast and reported quarterly profit that topped analysts’ estimates as Brazilian farmers bought more tractors.
To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net
To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net
