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U.S. Stock Futures Decline as Ukraine Overshadows Economic Data

Aug. 28 (Bloomberg) -- U.S. stock futures fell, indicating the Standard & Poor’s 500 Index may slide under the 2,000 level, as concern over the Ukraine crisis overshadowed data showing the economy expanded more than previously forecast in the second quarter.

Williams-Sonoma Inc. tumbled 11 percent after its third- quarter earnings forecast missed analysts’ estimates. Abercrombie & Fitch Co. declined 5.3 percent as second-quarter comparable sales fell more than analysts had projected. Guess? Inc. plunged 7.8 percent after the retailer lowered its annual earnings forecast.

S&P 500 futures expiring in September dropped 0.3 percent to 1,990.70 at 8:38 a.m. in New York. The equities index closed little changed yesterday after the rally that sent it above a record 2,000 lost some momentum amid low volume. Dow Jones Industrial Average contracts slid 49 points, or 0.3 percent, to 17,044 today.

“Every time we hit these big benchmarks, there are numerous people saying equities are overdue a correction,” Patrick Spencer, head of U.S. equity sales at Robert W. Baird & Co. in London said by phone. “Volumes will probably continue to contract as we get closer to the Labor Day weekend. The days leading up to that will present a good buying opportunity if we see a short bout of weakness.”

About 4.2 billion shares changed hands across U.S. exchanges yesterday, the least since July 3, data compiled by Bloomberg showed. Volume has remained below 5 billion shares for seven straight days. Markets are closed on Sept. 1.

Ukraine Crisis

Futures on the S&P 500 extended losses earlier, falling as much as 0.5 percent, after Ukraine said a counteroffensive that separatists waged amounted to a Russian invasion.

Ukrainian President Petro Poroshenko called an emergency security meeting to defend against what he called a “de facto” Russian incursion. France and Germany threatened President Vladimir Putin’s government with further sanctions after pro- Russian insurgents widened their attacks on government forces, taking several towns outside their strongholds of Donetsk and Luhansk, including near the Sea of Azov.

The crisis has previously failed to deter investors. The S&P 500 has rallied 4.7 percent from a low on Aug. 7 as speculation increased that the Federal Reserve will keep interest rates low for an extended period while the economy improves. The U.S. gauge has almost tripled since its low in March 2009, helped by three rounds of central-bank stimulus and record corporate earnings. The S&P 500 hasn’t had a decline of 10 percent in almost three years.

Economic Growth

The economy in the U.S. expanded more than previously forecast in the second quarter, propelled by the biggest gain in business investment in more than two years that bodes well for the rest of 2014.

Gross domestic product, the value of all goods and services produced, rose at a 4.2 percent annualized rate, up from an initial estimate of 4 percent and following a first-quarter contraction, Commerce Department figures showed.

Separate data showed the number of Americans filing for unemployment benefits were little changed last week as employers held on to staff in an improving economy. Claims decreased by 1,000 to 298,000 in the week ended Aug. 23 from 299,000 in the prior period.

Williams-Sonoma slid 11 percent to $66.50. The seller of cookware and home furnishings forecast third-quarter earnings of 58 cents to 63 cents a share. The average analyst projection in a Bloomberg survey was for 66 cents.

Abercrombie fell 5.3 percent to $41.85 after saying comparable sales dropped 7 percent in the second quarter. Analysts had estimated a decline of 4.1 percent.

Guess lost 7.8 percent to $23.64. Full-year adjusted profit will be $1.05 to $1.20 a share, lower than its May forecast of $1.40 to $1.60. Analysts on average had predicted $1.46 a share.

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