ECONOMIC INDICATORS

U.S. stock futures rise on fiscal-cliff optimism

BLOOMBERG FILE PHOTO/TIM BOYLE
AS OPTIMISM GROWS on whether Obama and Congress will avert the fiscal cliff, U.S. stock-futures rose, indicating the S&P500 will extend a three-week high.
Posted 11/29/12

ZURICH - U.S. stock-index futures rose, indicating the Standard & Poor’s 500 Index will extend a three- week high, amid optimism President Barack Obama will reach an agreement with Congress over a new budget.

Walt Disney Co., the world’s largest entertainment company, advanced after raising its dividend. Research In Motion Ltd. surged 12 percent as Goldman Sachs Group Inc. advised investors to buy the stock. Dynavax Technologies Corp., a drugmaker seeking to bring its first product to market, slumped 17 percent.

S&P 500 futures expiring in December increased 0.6 percent to 1,415.5 at 7:37 a.m. in New York. Dow Jones Industrial Average futures expiring the same month rose 71 points, or 0.5 percent, to 13,028.

“So far we have seen a 50-50 percent scenario priced in,” Thomas Haerter, chief strategist at Swisscanto Asset Management AG in Zurich, where he helps oversee about $54 billion, said in a phone interview today, referring to the chance of a deal to avert the so-called fiscal cliff. “These probabilities are starting to move in the direction of a compromise. Evidence of a recovering U.S. housing market is also supporting markets.”

U.S. stocks climbed yesterday after comments by Obama and Speaker of the House John Boehner fueled optimism an agreement can be reached to avert more than $600 billion in spending cuts and tax increases scheduled to begin on Jan. 1. The gains trimmed the S&P 500’s decline since the president won re- election on Nov. 6 to 1.3 percent.

‘Christmas’ deal

Obama reached out to chief executives and middle-income taxpayers, imploring them to press Congress to avoid the fiscal cliff as he said he wants to get a deal “done before Christmas.” Treasury Secretary Timothy F. Geithner arrives at the Capitol today to face demands from Republican leaders to spell out spending cuts. He will meet separately with each of the top four leaders in Congress.

A Bloomberg Global Poll published today showed that three out of four global investors expect Obama and congressional leaders to reach a short-term agreement. Only 6 percent of investors anticipate a political impasse that would send the U.S. economy over the fiscal cliff and into a recession, according to the poll conducted on Nov. 27.

The world economy is in its best shape in 18 months as China’s prospects improve and the U.S. looks likely to avoid the fiscal cliff, according to the poll.

Two-thirds of the 862 surveyed described the global economy either as stable or as improving. That’s up from just over half who said that in September and is the most since May 2011.

U.S. appeal

The U.S. came out on top for the eighth straight quarter when investors were asked which markets will offer the best opportunities over the next year.

The U.S. economy expanded at a “measured pace” in recent weeks as gains in consumer demand and housing were tempered by a slowdown in manufacturing and the impact of superstorm Sandy, the Federal Reserve said.

A report at 8:30 a.m. in Washington may show the gross domestic product in the world’s largest economy expanded 2.8 percent in the third quarter.

Another report may show pending house sales increased 1 percent in October from the prior month.

Walt Disney gained 0.8 percent to $49.60 in early New York trading after raising its annual dividend by 25 percent, joining other companies boosting their payouts ahead of an expected tax- rate increase next year.

The payment of 75 cents per share will be made on Dec. 28 to shareholders as of Dec. 10. The previous 60-cent annual dividend was paid to investors in January.

Google, RIM

Google Inc. advanced 0.5 percent to $687.07 after Oracle Investment Research raised the operator of the world’s most popular search engine to buy from hold.

RIM surged 12 percent to $12.43 in early New York trading after Goldman upgraded the BlackBerry maker to buy from neutral.

Infoblox Inc. rallied 18 percent to $16.50. The network and data-services provider said it expects fiscal-year adjusted earnings per share of 17 cents to 21 cents, compared with its previous forecast for 4 cents to 7 cents. That beat the average analyst estimate that called for 6 cents.

Guess? Inc. climbed 4.9 percent to $26.50 after declaring a special dividend of $1.20 per share payable Dec. 28. The company also said it sees fourth-quarter earnings per share of 85 cents to 95 cents, compared with the average 94 cent analyst estimate.

Dynavax slumped 17 percent to $2.38 in pre-market trading in New York.

Aeropostale Inc. dropped 6.7 percent to $13.17 in Europe after the teen-apparel retailer projected fourth-quarter earnings per share of 36 cents to 41 cents, compared with the average analyst estimate that called for 55 cents.

CEO Thomas Johnson said Black Friday weekend sales were “encouraging,” while he remains “cautious” for the rest of the quarter.

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