ECONOMIC INDICATORS

U.S. stock futures drop as GE, Microsoft results disappoint

BLOOMBERG FILE PHOTO/JIN LEE
STOCK FUTURES fell as Microsoft Corp. and General Electric Co. posted sales figures that missed estimates.
Posted 10/19/12

NEW YORK - U.S. stock futures fell, indicating the benchmark Standard & Poor’s 500 Index will trim its biggest weekly advance in more than a month, as Microsoft Corp. and General Electric Co. posted sales that missed estimates and euro-area leaders agreed on a banking regulation timetable.

Microsoft slid 2 percent after the largest software maker posted earnings that fell short of estimates. General Electric lost 2.2 percent as third-quarter revenue missed forecasts. McDonald’s Corp. slumped 2 percent as sales growth slowed at U.S. stores. Advanced Micro Devices Inc. dropped 1.9 percent after announcing a plan to cut staff by 15 percent.

S&P 500 futures expiring in December retreated 0.2 percent to 1,448.5 at 8:39 a.m. in New York. The equity benchmark has gained 2 percent so far this week, its biggest advance since the first week of September, as economic reports beat forecasts. Dow Jones Industrial Average futures declined 41 points, or 0.3 percent, to 13,446 today.

“Corporate earnings have come back a little bit, but that is to be expected given the overall growth environment,” said Angus Campbell, head of market analysis at Capital Spreads in London. “This week has been very strong and it’s encouraging to see the market go higher. It’s natural to see some profit taking whenever the market approaches its highs for the year.”

A release today will show that sales of existing houses decreased 1.7 percent in September, according to the median economist forecast in a Bloomberg News survey. They climbed 7.8 percent in August.

Earnings season

U.S. stocks snapped a three-day rally yesterday after Google Inc.’s third-quarter earnings missed analysts’ estimates. Eleven companies listed on the S&P 500 release results today, according to data compiled by Bloomberg.

Of the 116 companies on the equity benchmark that have reported since Oct. 9, 80 have posted earnings that exceeded analyst estimates, while 33 missed them, the data showed.

A European Union summit failed to discuss further financial assistance for Spain, according to French President Francois Hollande. Germany and France agreed to enforce common banking regulation for the euro area’s 6,000 lenders by the end of next year.

Microsoft retreated 2 percent to $28.91 after reporting a 22 percent drop in fiscal first-quarter net income to $4.47 billion, or 53 cents a share, amid declining sales of Windows, its operating system. That missed the 56-cent average estimate of analysts polled by Bloomberg. The company also posted sales of $16 billion, missing the average estimate of $16.4 billion.

GE slumps

General Electric lost 2.2 percent to $22.30 after reporting third-quarter revenue that fell short of the average analyst estimate as the decelerating global economy eroded demand for equipment from medical scanners to jet engines.

AMD dropped 1.9 percent to $2.57. The second-largest maker of processors for personal computers said that the job cuts will save $190 million next year, enabling the company to break even on quarterly revenue of $1.3 billion. AMD also forecast fourth- quarter sales that will miss analysts’ estimates.

McDonald’s fell 2.9 percent to $90.15. The world’s largest restaurant chain by sales reported third-quarter profit fell 3.5 percent. Sales at U.S. stores open at least 13 months rose 1.2 percent in the quarter, marking the slowest growth in 11 quarters. Analysts projected an increase of 1.7 percent, according to 21 estimates compiled by Consensus Metrix.

Honeywell International Inc. slipped 2 percent to $60.19. The maker of flight controls and thermostats narrowed its full- year target for earnings per share to $4.45 to $4.50 from a previous range of $4.40 to $4.55. It lowered its sales forecast to as much as $37.7 billion, compared with a range of $37.8 billion to $38.4 billion.

Chesapeake energy

Chesapeake Energy Corp gained 0.4 percent to $21.66 after Chief Executive Officer Aubrey McClendon told CNBC that the second-largest U.S. natural-gas producer plans to sell as much as $18 billion of assets in 2012-2013. Chesapeake also bought $2 billion in Utica Shale wells that can produce for at least 50 years, McClendon said.

A quarter century after the worst one-day stock crash in history, measures to prevent a repeat are failing to keep investors from losing confidence in the market.

The 23 percent plunge in the Dow on Oct. 19, 1987, came amid signs of a slowing economy, the threat of higher taxes and concern among individuals that trading was rigged for insiders. Today’s investors have pulled $440 billion from U.S. equity mutual funds since 2008 and sent trading to the lowest levels in at least four years, retrenching after the worst financial crisis since the Great Depression and the May 2010 stock crash, data compiled by Bloomberg and the Investment Company Institute show.

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