• News
  • Finance

U.S. Stock-Index Futures Rise as Durable-Goods Orders Increase

May 27 (Bloomberg) -- U.S. stock futures advanced, signaling the Standard & Poor’s 500 Index will extend a record, as an unexpected rise in durable goods orders boosted optimism in the world’s largest economy.

Pfizer Inc. added 0.7 percent after abandoning its attempt to buy AstraZeneca Plc. Hillshire Brands Co. jumped 22 percent after Pilgrim’s Pride Corp. offered to buy the meat producer for $6.4 billion. Michael Kors Holdings Ltd., the luxury-goods company reporting annual results tomorrow, advanced 1.7 percent. Staples Inc. slid 0.9 percent as Goldman Sachs Group Inc. recommended selling its shares.

Futures on the S&P 500 expiring in June rose 0.4 percent to 1,904.6 at 8:34 a.m. in New York. Dow Jones Industrial Average contracts gained 63 points, or 0.4 percent, to 16,649. Futures on the Nasdaq-100 Index increased 0.5 percent. U.S. equity markets were closed yesterday for the Memorial Day holiday.

“The growth that was delayed by the harsh winter will come through,” Tom Walker, who manages the 196 million-pound ($330 million) Martin Currie Global Portfolio Trust, said by phone from Edinburgh. “But it’s just getting harder as the market goes higher, valuations are getting stretched and volumes aren’t as high. Maybe we need to pause for breath. I’m not bearish -- there is still a lot of money supporting asset levels -- though it’s definitely about stock picking now.”

Durable Goods

Bookings for goods meant to last at least three years rose 0.8 percent after a 3.6 percent gain in the prior month that was stronger than previously reported, Commerce Department figures showed today in Washington. The median forecast of 68 economists surveyed by Bloomberg called for a 0.7 percent drop. Orders excluding transportation equipment also advanced.

A separate release at 10 a.m. in New York may show the Conference Board’s index of consumer confidence rose this month to near a six-year high. The preliminary reading of Markit Economics’ index of U.S. service industries may show activity expanded at a slower pace in May, according to the median economist estimate compiled by Bloomberg before data at 9:45 a.m.

A gauge of property prices in 20 cities probably increased 11.8 percent in the 12 months through March, economists projected before the latest reading of the S&P/Case-Shiller index at 9 a.m.

The S&P 500 rose 1.2 percent last week to a record amid better-than-estimated economic data, while the Russell 2000 Index of small companies increased 2.1 percent, ending a two- week slide.

The benchmark equities gauge is trading at 16.1 times the average projected earnings of its members, up from a multiple of 14.8 on Feb. 3, according to data compiled by Bloomberg. A gauge of U.S. equity volatility known as the VIX dropped 8.7 percent last week to 11.36, its lowest level since March 2013. The Chicago Board Options Exchange Volatility Index has retreated 47 percent from a 13-month high in February.

Volatility Gauge

Traders are loading up on VIX call options as history shows there’s a good chance stock-market volatility is about to increase. Calls on the measure, which become more valuable during times of market stress, outnumbered ones betting on a decrease in market swings by 3.4-to-1 this month, the most since 2008, data compiled by Bloomberg show. The index has closed below 15 for the past 27 days. A study from Sundial Capital Research Inc. shows the gauge usually rises after reaching such low levels.

Investors have been watching tensions between Russia and Ukraine as well as developments in Thailand after last week’s coup. Ukraine’s government said it inflicted “significant” losses on pro-Russian rebels and retook a major eastern airport a day after President-elect Petro Poroshenko vowed to wipe out the separatists. The violence highlights that Poroshenko faces a difficult task of uniting Ukraine after his May 25 presidential election victory.

Pfizer Climbs

Pfizer rose 0.7 percent to $29.69. The largest U.S. drugmaker yesterday stopped its attempt to buy AstraZeneca for 69.4 billion pounds, saying the bid rejected by its London-based competitor represented full value. Under U.K. takeover rules, Pfizer had until 5 p.m. London time yesterday to make a firm offer. It must now wait at least three months before talks can restart with AstraZeneca.

Hillshire, which sells Jimmy Dean sausages and Ball Park frankfurters, rallied 22 percent to $45.13. Pilgrim’s Pride offered $45 a share in cash for the company, according to a statement today. The combined entity would have sales of $12.4 billion.

Michael Kors, which has climbed 19 percent so far this year, increased 1.7 percent to $98.02. The Hong Kong-based company said on Feb. 4 that profit for the 12 months through March would reach as much as $3.09 a share. Analysts forecast $3.12, according to data compiled by Bloomberg.

Cisco Systems Inc. rose 1.5 percent to $24.90 as Deutsche Bank AG upgraded its rating on the maker of networking equipment to buy from hold. The brokerage cited higher demand for the company’s new switching, routing, security, wireless and cloud- computing products.

Staples, a maker of office stationary and furniture, slipped 0.9 percent to $11.55. Goldman Sachs cut its rating on the stock to sell from neutral, saying the company’s investments will offset the benefits of closing stores and cutting costs.

User Response
0 UserComments