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U.S. Stock Futures Decline; Chevron Falls in Pre-Market Trading

Feb. 4 (Bloomberg) -- U.S. stock futures declined, after the benchmark Standard & Poor’s 500 Index jumped to a five-year high, as investors awaited earnings reports.

Chevron Corp. lost 0.7 percent in early New York trading after UBS AG downgraded its recommendation on the stock. Wal- Mart Stores Inc. fell 0.9 percent as JPMorgan Chase & Co. cut its rating on the world’s largest retailer. Herbalife Ltd. tumbled 12 percent after a report the company is under investigation by the Federal Trade Commission.

S&P 500 futures expiring in March slipped 0.3 percent to 1,502.1 at 7:29 a.m. in New York. Dow Jones Industrial Average futures dropped 36 points, or 0.3 percent, to 13,894. The S&P 500 rallied 5 percent last month as lawmakers reached a budget compromise and companies reported better-than-estimated earnings. The Dow climbed above the 14,000-level last week for the first time since 2007, and is 1.1 percent away from its all- time high.

“The stock market is vulnerable to a short-term pull back,” Patrick Spencer, head of U.S. equity sales at Robert W Baird Ltd. in London, said in a phone interview. “I would certainly be cautious. It’s a little overbought. Earnings numbers were more about cost-cutting than topline, so while I do agree that momentum is coming back, in terms of growth, I’m not as optimistic.”

Earnings Today

Yum! Brands Inc. and Sysco Corp. are among 13 companies in the S&P 500 that report earnings today. About 73 percent of the 254 companies from the gauge that have released results this earnings season have exceeded profit projections, and 65 percent have beaten sales estimates, according to data compiled by Bloomberg.

Stocks in the world’s developed nations posted the best start to a year in two decades, a sign the global economy is poised to accelerate after contractions in Japan, the U.S. and Europe, if history is a guide.

The MSCI World Index of stocks in 24 markets rose 5 percent in January, the most since 1994. The last two times stocks gained this much in January, world gross domestic product expanded at least three times the 2.4 percent that economists forecast for 2013, according to data compiled by Bloomberg.

The recent rally in U.S. stocks has made the benchmark S&P 500 look overvalued given the slow pace in the country’s economic recovery, Patrick Legland, Societe Generale SA’s head of research, wrote in a note. The “risk-on mode” may end soon with a lack of positive economic data, Legland wrote.

Factory Orders

A Commerce Department report at 10 a.m. in Washington may show that new orders to factories gained 2.3 percent in December after being little changed in the previous month, according to a Bloomberg survey of economists.

In China, the non-manufacturing purchasing managers’ index climbed to 56.2 in January from 56.1 in December, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. A reading above 50 indicates expansion.

Chevron lost 83 cents to $115.67 in early New York trading. UBS cut its recommendation on the second-largest U.S. energy company to neutral from buy, citing the stock’s recent rally. The shares have gained 7.7 percent this year.

Wal-Mart fell 61 cents to $69.88 in early New York trading as JPMorgan downgraded its rating on the stock to neutral from overweight, a rating similar to buy. The brokerage also reduced its price target for the stock to $75 from a previous estimate of $84.

Herbalife, the marketer of nutritional supplements that hedge-fund manager Bill Ackman has called a pyramid scheme, dropped $4.04 to $31.03 in pre-market trading in New York. The company is the subject of a probe as the FTC revealed it received as many as 192 complaints over the past seven years, the New York Post reported, citing the FTC’s response to a freedom of information request.

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