U.S. stock futures decline amid earnings ahead of housing data

PRIOR TO THE RELEASE OF HOUSING DATA, U.S. stock-index futures fell on worse-than-projected earnings reports from Johnson & Johnson, Verizon and Boeing.
Posted 1/22/13

LONDON - U.S. stock-index futures fell, after benchmark indexes climbed to five-year highs last week, as investors weighed corporate earnings and awaited a report on existing home sales.

Johnson & Johnson, the world’s biggest maker of health-care products, dropped 0.7 percent after providing a full-year forecast that was less than analysts estimated. Verizon Communications Inc. lost 1.9 percent as it reported a decline in adjusted earnings. Boeing Co. slipped 1.2 percent after halting deliveries of its grounded 787 Dreamliner until regulators say its batteries are safe. DuPont Co. advanced 1.5 percent as fourth-quarter profit beat estimates.

Futures on the Standard & Poor’s 500 Index expiring in March fell 0.1 percent to 1,477.20 at 8:22 a.m. in New York. Contracts on the Dow Jones Industrial Average declined 17 points, or 0.1 percent, to 13,559 today. U.S. markets were closed yesterday for a holiday.

“People have rather low expectations for U.S. earnings because corporate leaders were very moderate in outlook, and that’s good for the reality versus the guidance,” Didier Duret, who helps manage about $195 billion as chief investment officer at ABN Amro Private Banking in Amsterdam, said by phone. “Even moderate earnings from the U.S. will be fine. The trigger point for markets will be economic reports, including home sales.”

The S&P 500 surged to the highest level since December 2007 last week as companies including General Electric Co. and Goldman Sachs Group Inc. reported better-than-estimated earnings. Some 73 percent of the 73 companies in the benchmark index that have released results so far exceeded projections, according to data compiled by Bloomberg. Analysts on average forecast growth of 3.8 percent in fourth-quarter profit, the data show.

17 companies

Johnson & Johnson and Freeport-McMoRan Copper & Gold Inc. are among 17 companies in the S&P 500 that are reporting quarterly earnings today.

A report at 10 a.m. in Washington may show existing home sales rose. Purchases climbed to a 5.1 million annual rate last month, from 5.04 million in November, according to the median forecast of economists surveyed by Bloomberg.

In Asia, the Bank of Japan made its strongest commitment yet to end two decades of stagnation, shifting to Federal Reserve-style open-ended asset purchases.

Governor Masaaki Shirakawa and six of nine board members voted for a 2 percent inflation target, to be achieved “at the earliest possible time” -- a pace not sustained in Japan since the early 1990s. While judging that the economy is “relatively weak,” and that consumer prices will be flat for the time being, the BOJ refrained from adding immediate stimulus. consumer items declined. The company’s shares fell.

Missed guidance

Johnson & Johnson slumped 0.7 percent to $72.70. Profit for 2013 will be $5.35 to $5.45 a share, the company said in a statement. The guidance missed the $5.49 average of 23 analyst estimates compiled by Bloomberg. Worldwide consumer sales declined in 2012 to $14.4 billion, a 2.9 percent decrease caused by a negative currency impact.

Verizon retreated 1.9 percent to $41.75 after the second- largest U.S. phone company said fourth-quarter earnings excluding some items fell to 38 cents a share from 52 cents a year earlier. That missed the 50 cent average estimate of analysts in a Bloomberg survey.

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