Stock-index futures advance on nuclear agreement with Iran

STOCK-INDEX FUTURES gained Monday on news that Iran has agreed to limit its nuclear program in exchange for as much as $7 billion in relief from economic sanctions over six months. Iranian Foreign Minister Mohammad Javad Zarif and U.S. Secretary of State John Kerry announced the agreement yesterday after five days of talks in Geneva. / BLOOMBERG NEWS PHOTO/SCOTT EELLS
STOCK-INDEX FUTURES gained Monday on news that Iran has agreed to limit its nuclear program in exchange for as much as $7 billion in relief from economic sanctions over six months. Iranian Foreign Minister Mohammad Javad Zarif and U.S. Secretary of State John Kerry announced the agreement yesterday after five days of talks in Geneva. / BLOOMBERG NEWS PHOTO/SCOTT EELLS

LONDON – U.S. stock-index futures gained, indicating the Standard & Poor’s 500 Index will extend its record, as Iran agreed to limit its nuclear program.

Alcoa Inc. climbed 3.5 percent and Caterpillar Inc. rose 1.7 percent after analysts recommended buying the shares. Delta Air Lines Inc. rallied 2.3 percent as crude slid. Barrick Gold Corp. and Newmont Mining Corp. dropped at least 1.4 percent after the price of gold retreated. Qualcomm Inc. lost 1.3 percent as the company said a Chinese agency started a probe related to an anti-monopoly law.

Futures on the S&P 500 expiring in December advanced 0.3 percent to 1,807.20 at 7:45 a.m. in New York. Dow Jones Industrial Average contracts added 64 points, or 0.4 percent, to 16,091 today.

“Some of the risk premium has been taken out because of the Iran deal,” Henk Potts, who helps oversee about $310 billion as a strategist at Barclays Plc’s wealth-management business in London, said by telephone. “The agreement creates a reduction in terms of global risk and is seen as beneficial for global markets. High commodity prices are one of the key costs to businesses and consumers so a decline in oil equates to lightening up the tax burden.”

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Brent crude, gasoline and heating oil all fell by more than 1.3 percent today following the accord with Iran. Gold futures declined 1.2 percent.

Iran accord

Iran agreed to limit its nuclear program in exchange for as much as $7 billion in relief from economic sanctions over six months. Iranian Foreign Minister Mohammad Javad Zarif and U.S. Secretary of State John Kerry announced the agreement yesterday after five days of talks in Geneva.

Barrick Gold dropped 1.8 percent to $16.09 and Newmont Mining retreated 1.4 percent to $25.38. Delta rose 2.3 percent to $29.25 and United Continental Holdings Inc. gained 1.5 percent to $39.10 to pace gains among airlines.

The S&P 500 rose for a seventh straight week, its longest winning streak since February, as reports showed retail sales beat estimates and fewer Americans than expected filed for jobless benefits.

The National Association of Realtors publishes its figures for pending sales of existing houses at 10 a.m. in Washington. Sales increased 1.1 percent in October, economists forecast in a Bloomberg survey. They dropped 5.6 percent in September.

Equity rally

The benchmark gauge has rallied 27 percent this year as the Federal Reserve continued to buy $85 billion of bonds a month to stimulate economic growth. If the gauge holds on to its gains, it will mark the best year for U.S. equities since 1998.

Four out of five investors expect the Fed to delay a decision to begin reducing the stimulus until March 2014 or later, according to the Bloomberg Global Poll of investors, traders and analysts who are subscribers. Just 5 percent are looking for a move at its Dec. 17-18 meeting, the Nov. 19 poll showed.

Alcoa gained 3.5 percent to $9.56. Goldman Sachs Group Inc. upgraded the shares of the largest U.S. aluminum maker to buy from neutral. The brokerage said the stock may climb to $11.

“We believe that the market is not fully appreciating Alcoa’s solid position in growing value-added and high-margin aluminum products for the aerospace and automotive industries,” analysts Sal Tharani and Chelsea Bolton wrote.

Caterpillar upgrade

Caterpillar added 1.7 percent to $84.25. Bank of America Corp. raised the world’s largest maker of mining equipment to buy from neutral, saying the power-systems business will help earnings next year.

Qualcomm slid 1.3 percent to $72. The largest maker of chips for smartphones said China’s National Development and Reform Commission began an investigation related to an anti-monopoly law in the country. The company isn’t aware of any charge by the agency, it said. Qualcomm got 49 percent of its $24.9 billion in sales from China in its fiscal year ended in September.

Laszlo Birinyi, president of Birinyi Associates Inc., said the four-year bull market will keep going because optimism about the rally hasn’t overtaken concern about company earnings and valuations.

The lack of exuberance shows people aren’t fully invested and have money left to buy shares, according to Birinyi, one of the first money managers to advise clients to buy in 2009.

Barista stories

“We still haven’t heard the story about the barista in Starbucks who’s made a lot of money in the market,” he said in an interview on Bloomberg Television’s “Street Smart” with Trish Regan and Adam Johnson today. “We’re not there yet.”

Investors have added to options that provide protection in the event of a market plunge, based on the CBOE SKEW Index. The gauge uses the prices of short-term, out-of-the-money S&P 500 options to calculate the market’s perception of the probability for a tail-risk event.

The SKEW index rose to 137 on Nov. 18 as the Fed considered scaling back its bond-purchasing program and American lawmakers prepared for another round of budget talks.

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