U.S. Stock Futures Rise, Signaling Fresh S&P 500 Record
U.S. stock-index futures rose, indicating the Standard & Poor’s 500 Index will extend its all-time high, after the Federal Reserve unexpectedly refrained from cutting monetary stimulus and investors awaited data on home sales and leading indicators.
Apple Inc. and DuPont Co. jumped at least 1.1 percent to pace advances among the largest companies. Agilent Technologies Inc. jumped 11 percent as the provider of bio-analytical and electronic measurement services said it will split into two public companies. Rite Aid Corp. surged 12 percent as the drugstore chain raised its profit forecast. Oracle Corp. (ORCL)retreated 0.5 percent after the software maker issued a weaker-than-projected outlook.
S&P 500 futures expiring in December advanced 0.3 percent to 1,722.70 at 8:36 a.m. in New York. Contracts on the Dow Jones Industrial Average advanced 27 points, or 0.2 percent, to 15,621 today.
“The Bernanke put is back,” said Keith Wade, who helps oversee $388 billion as chief economist at Schroders Plc in London, referring to the Fed’s policy of supporting financial markets through monetary policy, which some investors liken to the insurance against losses offered by owning a put option. “Risk assets will enjoy the ride.”
Bond Buying
The benchmark index climbed 1.2 percent to a record yesterday as the Fed unexpectedly refrained from reducing bond buying. Treasury yields have jumped since May, when Fed Chairman Ben S. Bernanke first outlined a possible timetable for a reduction in asset purchases.
The Federal Open Market Committee said it wants more evidence of an economic recovery before paring its $85 billion-a-month bond-buying program, surprising economists who predicted a reduction in the plan. The Fed has held the main interest rate near zero since December 2008 and pushed its balance sheet to a record $3.66 trillion through three rounds of stimulus, helping send the S&P 500 155 percent higher since March 2009.
“To be fair to Bernanke, he set the conditions necessary for tapering and the conditions are not there,” Ross Yarrow, who sells U.S. equities to European investors for Robert W. Baird & Co. in London, said in a phone interview today. That’s “not because of any particular deterioration but because, by talking about tapering, he already achieved an adjustment in yields,” Yarrow said.
Ten-year U.S. Treasury yields climbed as high as 3.01 percent on Sept. 6 from 1.61 percent on May 1. They plunged 16 basis points yesterday to 2.69 percent.
Relative Strength
The S&P 500 (SPX)’s Relative Strength Index, a technical measure of market momentum, advanced to 72.13 yesterday. That breached the level of 70 that analysts say indicates an “overbought” situation for the first time since Aug. 2, according to data compiled by Bloomberg.
Data today showed jobless claims in the U.S. rose less than forecast last week as two states began working through a backlog of applications that were caused by computer-system changeovers. Applications for unemployment benefits climbed by 15,000 to 309,000 in the week ended Sept. 14 from a revised 294,000 in the prior period. The median forecast of 53 economists surveyed by Bloomberg called for an increase to 330,000.
Economic Data
The Conference Board releases its index of U.S. leading economic indicators for August at 10 a.m. New York time. The measure climbed 0.6 percent last month, according to a Bloomberg survey of economists. Other data today may show sales of existing homes fell in August.
Apple jumped 1.1 percent to $469.89 and DuPont climbed 2.2 percent to $61.79 to pace advances among the largest companies.
Agilent increased 11 percent to $54.90 on its plan to split into two businesses. One company will focus on life sciences, diagnostics and applied markets, retaining the Agilent name. The other will be comprised of Agilent’s current portfolio of electronic measurement products, according to a statement.
Rite Aid surged 12 percent to $4.17. The drugstore chain raised its annual profit and revenue forecasts after second-quarter results exceeded analyst estimates.
BioMarin Pharmaceutical Inc. (BMRN) rallied 9 percent to $84.44. Roche Holding AG, the world’s biggest maker of cancer drugs, is lining up as much as $15 billion in debt financing to buy Novato, California-based BioMarin, DealReporter reported, citing people familiar with the situation.
Oracle declined 0.5 percent to $33.70. The largest maker of corporate-database software predicted yesterday that profit, excluding some items, for the fiscal second quarter will be 64 cents to 69 cents a share. Oracle would have to reach the top of that range to match analysts’ 69-cent average estimate, according to data compiled by Bloomberg.
Pier 1 Imports Inc. plunged 7.8 percent to $21.75. The home furnishings retailer cut its earnings forecast for the year after second-quarter profit fell short of analysts’ predictions.
Source: Bloomberg
