ECONOMIC INDICATORS

U.S. stock futures advance as global markets extend rally on Fed

BLOOMBERG FILE PHOTO/TIM BOYLE
STOCK FUTURES CLIMBED in the U.S. as global markets rallied on the Federal Reserve's bond-purchase program.
Posted 9/14/12

NEW YORK - U.S. stock-index futures climbed, indicating the Standard & Poor’s 500 Index will rise from its highest level since 2007, as markets rallied around the world on the Federal Reserve’s bond-purchase program.

Freeport-McMoRan Copper & Gold Inc. and Alcoa Inc. climbed at least 1.3 percent, as commodity prices rallied. Staples Inc. jumped 4.7 percent amid a report private-equity firms are considering buying the largest U.S. office-supplies chain. Analogic Corp. surged 12 percent after profit topped estimates.

S&P 500 futures expiring in December climbed 0.3 percent to 1,454.6 at 9:10 a.m. in New York. The benchmark equities gauge rose yesterday for the third straight day and closed at the highest level since Dec. 31, 2007. Dow Jones Industrial Average futures added 35 points, or 0.3 percent, to 13,480 today.

“It was a strong signal from the Fed and a very welcome move but we’ll have to wait and see if this is more than a one or two-day wonder for the market,” said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London. “All of this central-bank policy removes a degree of uncertainty that has been plaguing markets.”

All 10 groups in the S&P 500 rallied yesterday after the Federal Open Market Committee at the end of its two-day meeting in Washington committed to buying bonds until the U.S. labor market recovers “substantially.” The central bank said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month.

Asian and European equities extended the rally today, led by gains in basic-resource companies and automakers.

Unlimited purchases

The S&P 500 is about 7 percent from reaching its record closing high after rallying 16 percent this year amid expectations central banks will take steps to stimulate the economy. Equities received a boost last week as the European Central Bank agreed to an unlimited bond-buying program to help reduce borrowing costs in the euro region.

Bank of America Corp.’s Savita Subramanian forecast the S&P 500 will rise to 1,600 at the end of 2013, 2.2 percent higher than the previous all-time high of 1,565.15. The equity index will continue to climb amid earnings growth, Subramanian, the New York-based head of U.S. equity strategy, said in a note.

Stock futures rose today as data showed retail sales in the U.S. increased in August by the most in six months. The cost of living in the U.S. climbed in August by the most in more than three years, reflecting a surge in fuel costs.

UnitedHealth Group Inc. will replace Kraft Foods Inc. in the Dow following Kraft’s plans to spin off its North American grocery business, S&P Dow Jones Indices announced. The change will go into effect at the opening of trading on Sept. 24, the index provider said.

Kraft will be renamed Mondelez International Inc. after the spin-off and the Dow Jones Averages Index Committee believes that Mondelez’s reduced market capitalization and lower percentage of revenue from the U.S. make it less suitable for the Dow average, according to the statement.

UnitedHealth jumped 2.4 percent to $55.19. Kraft slipped 0.6 percent to $39.88.

Mining companies climbed as copper heads for its highest close since May in London while gold is trading near a six-month high. Freeport, the biggest publicly traded copper producer, added 1.6 percent to $42.46. Alcoa Inc., the largest U.S. aluminum producer, gained 1.3 percent to $9.76.

Staples rose 4.7 percent to $12.52. Fortune reported yesterday that private-equity firms including Bain Capital LLC are considering buying the retailer. Discussions to take over Staples are preliminary and an offer wouldn’t be made until late this year, Fortune reported, citing people it didn’t name.

Analogic jumped 12 percent to $77.64. The medical and airport-security device maker reported adjusted earnings in the fourth quarter of $1.32 a share, exceeding the average analyst estimate of 84 cents. Sales were $151 million compared with the average projection of $141 million.

Werner Enterprises Inc. lost 11 percent to $21.10. The trucking and logistics company forecast third-quarter earnings will be no more than 36 cents a share, below the 44 cents estimated by analysts on average.

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