BLBG: U.S. Stock-Index Futures Rise as Alcoa Climbs on Earnings
U.S. stock-index futures rose, following the Standard & Poor’s 500 Index’s biggest rally this year, as Alcoa (AA) Inc.’s better-than-expected profit unofficially kicked off the earnings season.
Alcoa jumped 3 percent in early New York trading after reporting third-quarter earnings, the aluminum producer’s biggest in three years. Gap Inc. plunged 9.1 percent after saying its chief executive officer will step down and posting disappointing September sales. Advanced Micro Devices Inc. tumbled 6.4 percent after naming a new CEO a week before the chipmaker reports earnings.
Futures on the S&P 500 (SPX) expiring in December rose 0.3 percent to 1,967.1 at 6:21 a.m. in New York. The benchmark gauge advanced 1.8 percent yesterday, the biggest jump since October 2013, following the Federal Reserve’s hint that interest rates will stay near zero. Dow Jones Industrial Average contracts added 30 points, or 0.2 percent, to 16,933 today.
“The Fed minutes calmed down the market and equities have corrected positively,” said Christian Zogg, who manages about the equivalent of about $10 billion as head of equity and fixed income at LLB Asset Management AG in Vaduz, Liechtenstein. “We are in a phase of uncertainty until the big companies release their third-quarter figures.”
A report at 8:30 a.m. Washington time may show that applications for first-time jobless claims rose to 295,000 in the week ended Oct. 4 from 287,000 the prior week, according to economists surveyed by Bloomberg.
Slower Growth
A number of Federal Open Market Committee policy makers said U.S. growth “might be slower than they expected if foreign economic growth came in weaker than anticipated,” according to minutes from the Sept. 16-17 meeting released yesterday. In a statement following the gathering, policy makers renewed their pledge to keep interest rates near zero for a “considerable time.”
Profit at companies in the S&P 500 rose 4.9 percent in the July-September period, according to the average estimate of analysts in a Bloomberg survey. PepsiCo Inc. and Family Dollar Stores Inc. report earnings today.
Alcoa jumped 3 percent to $16.55 in early trading. Profit excluding one-time items was 31 cents in the third-quarter, surpassing the 22-cent average analyst estimate compiled by Bloomberg. Sales also beat expectations, and Alcoa forecast record shipments to auto and aerospace customers in the current quarter.
Allergan Inc. added 3.9 percent to $198. Deutsche Bank AG rated the Botox maker a buy with a $215 price estimate. Valeant Pharmaceuticals International Inc. may raise its takeover offer for Allergan by $15 a share ahead of a December shareholder meeting, people with knowledge of the matter said yesterday.
Gap tumbled 9.1 percent to $38.10. CEO Glenn Murphy was credited with reviving the apparel maker during his seven-year tenure. Art Peck, who serves as president of Gap’s growth, innovation and digital unit, will take the helm as new CEO on Feb. 1, the company said. September sales at stores open at least a year and online were little changed from a year earlier. Analysts had predicted a 1.2 percent gain.
AMD retreated 6.4 percent to $3.07. Lisa Su, who had been chief operating officer, is replacing Rory Read effective immediately, the company said yesterday. Reflecting the rushed nature of the announcement, AMD said Su is still negotiating with the board on the terms of her new employment and Read is still working out a separation agreement. The company reports earnings on Oct. 16.
To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net
To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Trista Kelley, Srinivasan Sivabalan
