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U.S. Stock Futures Rise as Obama Prepares for Budget Talks

Nov. 16 (Bloomberg) -- U.S. stock futures rose, with the Standard & Poor’s 500 Index poised for a second weekly drop, as President Barack Obama prepared to meet Republican lawmakers for talks to prevent tax increases and spending cuts from automatically coming into force next year.

Gap Inc., the largest U.S. specialty-apparel retailer, climbed 3.8 percent after raising its full-year earnings forecast as sales in North America advanced. Dell Inc. declined 2.7 percent after its revenue forecast missed analysts’ estimates amid a slump in demand for personal computers. Dynavax Technologies Corp. tumbled 56 percent after its hepatitis B vaccine failed to win the backing of U.S. regulatory advisers.

S&P 500 futures expiring in December rose 0.2 percent to 1,354.5 at 8:19 a.m. New York time. The benchmark gauge has fallen 1.9 percent so far this week. Dow Jones Industrial Average futures added 14 points, or 0.1 percent, to 12,536. The number of shares changing hands in Stoxx Europe 600 Index’s companies was 9.3 percent below the 30-day average at this time of day.

The selloff “probably has a little more to go in the short term as the fiscal cliff is obviously the biggest worry for the market,” Nick Xanders, an equity strategist at BTIG Ltd. in London, said in an interview on Bloomberg Television. “The uncertainty is keeping companies on hold and consumers on hold until next year.”

President Barack Obama will hold an opening round of talks with Congressional leaders today to reach a deal to avoid a $607 billion deficit-cutting package known as the fiscal cliff. U.S. industrial production probably cooled in October as superstorm Sandy knocked out power in the Northeast, economists said before a report today.

Concern about the so-called fiscal cliff has driven the S&P 500 to the lowest level since July 25. The index has retreated 5.3 percent since President Barack Obama’s re-election set up a budget showdown with the Republican-controlled House of Representatives.

Gap climbed 3.8 percent to $34.52. The company has been among the top performers on the S&P 500 this year as improved product and marketing at its namesake, Old Navy and Banana Republic brands drive sales in North America. The retailer, which said revenue this fiscal year has increased 6.4 percent to $10.9 billion, is benefiting from lower cotton costs and new management, especially at value-oriented Old Navy.

Dell retreated 2.7 percent to $9.30. The No. 3 PC maker is struggling amid a deep slump in demand as companies wait to upgrade machines and consumers turn to smartphones and tablets like Apple Inc.’s iPad and iPhone to manage their work and personal lives. Even as Chief Executive Officer Michael Dell works to mitigate the decline by adding storage, networking gear, software and services through acquisitions, the company still gets half its sales from PCs.

Dynavax tumbled 56 percent to $2.03. While Heplisav works to treat the contagious liver disease, Dynavax didn’t provide adequate safety data to support approval, Food and Drug Administration advisers voted yesterday. The FDA, set to make a decision by Feb. 24, isn’t required to follow the panel’s guidance.

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