ECONOMIC INDICATORS

U.S. stock futures fall as retail sales drop

BLOOMBERG FILE PHOTO/JIN LEE
U.S. STOCK FUTURES fell, following the biggest one-day gain in two weeks for the Standard & Poor’s 500 Index, as a report showed retail sales in the world’s biggest economy unexpectedly dropped for a third straight month.
Posted 7/16/12

NEW YORK - U.S. stock futures fell, following the biggest one-day gain in two weeks for the Standard & Poor’s 500 Index, as a report showed retail sales in the world’s biggest economy unexpectedly dropped for a third straight month.

General Electric Co. fell 1 percent after Morgan Stanley reduced its recommendation on the stock. Arch Coal Inc. and Alpha Natural Resources Inc. declined at least 5.5 percent as Bank of Montreal cut its ratings, citing potential financing issues. Citigroup Inc., the third-biggest U.S. bank, climbed 1.9 percent after reporting second-quarter profit that beat estimates.

S&P 500 futures expiring in September lost 0.3 percent to 1,348.2 as of 9:02 a.m. in New York. The U.S. stocks benchmark added 0.2 percent last week after a 1.7 percent rally on July 13 reversed four days of losses. Dow Jones Industrial Average futures slipped 32 points, or 0.3 percent, to 12,680 today.

“It looks to be another difficult day in the U.S.,” said Chris Beauchamp, a market analyst at IG Index in London. “There still seems little reason to become enthusiastic about the prospects for the global economy.”

China’s Premier Wen Jiabao warned the momentum for a recovery in economic growth isn’t yet in place and that “difficulties” may persist for a while, the official Xinhua News Agency reported.

In the U.S., retail sales dropped 0.5 percent in June, following a 0.2 percent decrease in May, Commerce Department figures showed today in Washington. The decline was worse than the most-pessimistic forecast in a Bloomberg News survey in which the median projection called for 0.2 percent rise. The June decrease was broad-based, including car dealers, department stores and gasoline stations.

Manufacturing in the New York region expanded in July at a faster pace than anticipated, signaling factories will keep contributing to growth. The Federal Reserve Bank of New York’s general economic index rose to 7.4 from 2.3 in June. The median forecast of 51 economists surveyed by Bloomberg News called for an increase to 4.0. Readings greater than zero signal expansion in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut. The last negative reading was in October.

A rally in JPMorgan Chase & Co. and speculation China will boost stimulus measures at the end of last week tempered concern about earnings and the global economy. JPMorgan jumped 6 percent on July 13 as Chief Executive Officer Jamie Dimon said the biggest U.S. bank by assets will probably post record earnings for 2012 even after reporting a $4.4 billion trading loss.

Twenty out of the 31 S&P 500 companies that have reported results since July 10 beat analysts’ earnings estimates, data compiled by Bloomberg show. Overall, profits probably decreased 2.1 percent in the second quarter, the first drop in almost three years, according to a Bloomberg survey of analysts.

General Electric, the world’s biggest maker of jet engines, power generation equipment and locomotives, declined 1 percent to $19.58. The Fairfield, Connecticut-based company was cut to equalweight from overweight by Morgan Stanley, which cited the stock’s valuation and gas orders.

Arch Coal, the fourth-largest U.S. producer of the fuel, sank 5.5 percent to $5.80 after Bank of Montreal cut the stock to underperform from market perform. Alpha Natural, the largest producer of steelmaking coal, slid 6.2 percent to $7.16 after being reduced to underperform from outperform. BMO cited the weakest balance sheets and lowest margins in the group for the downgrades.

Citigroup, the third-biggest U.S. bank, advanced 1.9 percent to $27.15 after reporting a 12 percent drop in second- quarter profit that beat analysts’ estimates on revenue from advising on mergers and underwriting stocks and bonds.

Net income declined to $2.95 billion, or 95 cents a share, from $3.34 billion, or $1.09, a year earlier. Excluding accounting adjustments and a loss from the sale of a stake in a Turkish bank, earnings were $1 a share, compared with the average estimate of 89 cents in a Bloomberg survey of 18 analysts.

MasterCard Inc. advanced 3.1 percent to $443 and Visa Inc. rose 3.5 percent to $128.40 after they agreed to settle a price- fixing case brought by retailers over credit-card swipe fees. The total value of the settlement is $7.25 billion to a class of about 7 million merchants in the U.S. that accept Visa and MasterCard credit and debit cards, according to Robins Kaplan Miller & Ciresi LLP, a law firm for the merchants.

Human Genome Sciences Inc. advanced 3.1 percent to $14 after a person with knowledge of the matter said GlaxoSmithKline Plc may agree to buy the company at $14 a share as early as today.

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