economic activity

U.S. stock futures advance amid speculation on Japan stimulus

BLOOMBERG FILE PHOTO/TIM BOYLE
U.S. STOCKS FUTURES ADVANCED amid speculation that Japan will stimulate its economy.
Posted 2/25/13

NEW YORK - U.S. stock futures rose, following the first weekly drop in the Standard & Poor’s 500 Index this year, on growing speculation Japan will stimulate its economy.

BlackBerry, the struggling smartphone maker, jumped 3.9 percent on a report sales of the new BlackBerry 10 device are above the company’s expectations. Cummins Inc. rallied 2.4 percent after the maker of diesel engines was added to the “Conviction Buy” list at Goldman Sachs Group Inc.

S&P 500 futures expiring in March rose 0.5 percent to 1,522.60 at 9:09 a.m. New York time. Dow Jones Industrial Average futures added 60 points, or 0.4 percent, to 14,041. The number of shares changing hands in Stoxx Europe 600 Index’s companies was 4.3 percent below the 30-day average at this time of day, according to data compiled by Bloomberg.

“Continued earnings momentum and rising corporate confidence suggest improved capital spending this year,” said James Paulsen, the chief investment strategist at Minneapolis- based Wells Capital Management, which oversees about $325 billion. “Today investors are being reminded that monetary accommodation is likely to remain prevalent across the globe from Europe to Japan.”

Equity futures followed global shares higher on speculation Japan’s Prime Minister Shinzo Abe will nominate a central bank chief who favors stimulus. The euro gained as Italy voted in general elections. Pier Luigi Bersani, the ex-communist who campaigned to maintain budget rigor, is on track to win Italy’s first parliamentary election since Europe’s financial crisis broke out, according to a SkyTG24 Tecne poll.

Spending cuts

This week’s March 1 deadline to avoid automatic U.S. spending cuts may get investors’ attention. It marks another fiscal showdown between President Barack Obama and congressional Republicans. If Congress doesn’t act, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years.

The S&P 500 has gained 6.3 percent this year as U.S. lawmakers agreed on a compromise on taxes in January and amid better-than-estimated corporate earnings. About 74 percent of the S&P 500 companies that have released quarterly results beat profit estimates, according to data compiled by Bloomberg. The index trades at 14.97 times reported earnings, below the average since 1954 of 16.4.

‘Ambitious’ expectations

BlackBerry, formerly known as Research In Motion Ltd., jumped 3.9 percent to $13.70. Sales of BlackBerry 10 devices are above the company’s “ambitious” expectations and production has been increased, chief executive officer Thorsten Heins told Frankfurt Allgemeine.

Cummins rallied 2.4 percent to $115.50.

Akamai Technologies Inc. gained 1.8 percent to $36.91. The company was raised to outperform from neutral at Macquarie Group Ltd. by equity analyst Kevin Smithen. The 12-month share-price estimate is $42.

CME Group Inc., the world’s largest futures exchange, has approached Deutsche Boerse AG to consider beginning talks on a merger, according to four people familiar with the situation.

A combination of Chicago-based CME and Deutsche Boerse would unite the biggest futures exchanges in the U.S. and European markets. CME shares have rallied 15 percent this year, giving it a market capitalization of $19.4 billion. Deutsche Boerse climbed 1 percent through Feb. 22, bringing its value to 9 billion euros ($11.9 billion).

The companies met again last month to debate whether to begin formal takeover talks and haven’t yet made a decision, the people said. No offer has been made, nor have terms been discussed, they said.

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