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U.S. Stock-Index Futures Advance as Retail Sales Top Forecasts

Jan. 14 (Bloomberg) -- U.S. stock-index futures rose, following the biggest drop in two months for the Standard & Poor’s 500 Index, as retail sales advanced more than forecast in December and investors weighed earnings from major banks.

Time Warner Cable Inc. gained 1.5 percent after rejecting an acquisition offer from Charter Communications Inc. Google Inc. added 1.4 percent after saying it will buy digital- thermostat maker Nest Labs Inc. for $3.2 billion in cash. JPMorgan Chase & Co. rose 0.5 percent while Wells Fargo & Co. dropped 0.4 percent after reporting fourth-quarter results.

S&P 500 futures expiring in March added 0.2 percent to 1,818.6 at 8:34 a.m. in New York. Contracts on the Dow Jones Industrial Average gained 28 points, or 0.2 percent, to 16,242 today.

“The earnings season is upon us, and that will be driving markets,” said Andreas Nigg, head of equity and commodity strategy at Vontobel Asset Management in Zurich. “Equities in developed markets had a very good year and valuation is no longer cheap. However, alternatives such as fixed income do not appear more attractive either, and this is a dilemma investors are dealing with at the moment.”

The S&P 500 fell 1.3 percent yesterday, the most since November. The benchmark index has dropped 1.6 percent so far in January for the worst start to a year since 2009, as investors weighed valuations after a 30 percent rally last year that sent the gauge to a record.

The S&P 500 trades at 15.4 times the estimated earnings of its members, more than the average multiple of 14.1 over the last five years, data compiled by Bloomberg show. The gauge ended 2013 at its highest valuation since the end of 2009.

Corporate Earnings

Wells Fargo and JPMorgan are among companies reporting financial results today. Bank of America Corp., Citigroup Inc. and Goldman Sachs Group Inc. report later this week. Earnings for companies in the index probably climbed 4.9 percent on average in the fourth quarter, while sales probably increased 1.8 percent, according to analyst estimates compiled by Bloomberg.

U.S. retail sales increased 0.2 percent after a 0.4 percent advance in November that was smaller than previously reported, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 0.1 percent gain. Excluding cars, demand jumped by the most in almost a year.

Investors are watching economic data for signals on the pace of Federal Reserve stimulus cuts. Three rounds of monetary stimulus from the Fed have helped push the S&P 500 higher by 169 percent from a 12-year low in 2009. The Fed, which next meets Jan. 28-29, last month announced a reduction in its monthly bond-buying program, citing a recovery in the labor market.

Jobs Growth

The S&P 500 increased on Jan. 10 after a report from the Labor Department showed employment rose in December at the slowest pace in almost three years. The data ended months of improving job growth that had signaled the world’s largest economy was picking up.

Stocks extended declines yesterday after Fed Bank of Atlanta President Dennis Lockhart said weak payroll growth last month shouldn’t discourage policy makers from reducing monthly bond purchases as long as the economy continues to gain strength.

Time Warner Cable rose 1.5 percent to $134.35 today. The broadband-service provider’s chief executive officer, Rob Marcus, called Charter’s $132.50-a-share bid a “low-ball offer.” He spoke in an interview yesterday. The proposal included about $83 cash per share and about $49.50 in stock. Excluding debt, the deal would have been worth $37.3 billion.

Google, JPMorgan

Google gained 1.4 percent to $1,138.51. The owner of the most popular Internet-search engine yesterday said it’s buying Nest Labs for $3.2 billion in cash. The purchase of Nest, led by former Apple Inc. executive Tony Fadell, brings Web-connected devices to Google.

JPMorgan rose 0.5 percent to $57.99. Quarterly profit fell 7.3 percent on $2.6 billion of settlements tied to Bernard Madoff’s Ponzi scheme as rising legal costs ended the firm’s three-year streak of record annual earnings.

Wells Fargo fell 0.4 percent to $45.38. The largest U.S. home lender posted record fourth-quarter and full-year profit as expense cuts bolstered results.

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