U.S. stock-index futures decline on concern over Japan recession

HASBRO'S STOCK was on the rise Monday morning after reports that the Pawtucket company will not acquire DreamWorks Animation, the maker of
HASBRO'S STOCK was on the rise Monday morning after reports that the Pawtucket company will not acquire DreamWorks Animation, the maker of "Shrek." / COURTESY HASBRO

FRANKFURT – U.S. stock-index futures dropped, signaling equities will pull back after advancing to a record last week, as data showed Japan fell into recession and a New York-area manufacturing gauge increased less than forecast.

Pfizer Inc. fell 1.7 percent after cutting its 2014 earnings forecast following the purchase of rights to a cancer drug developed by Merck KGaA. DreamWorks Animation SKG Inc. slipped 13 percent after Hasbro Inc.’s approach to acquire the studio was said to have ended without agreement. Baker Hughes jumped 16 percent after agreeing to sell itself to Halliburton Co. for $34.6 billion.

Futures on the Standard & Poor’s 500 Index expiring in December slid 0.3 percent to 2,032.6 at 8:33 a.m. in New York. Dow Jones Industrial Average contracts lost 35 points, or 0.2 percent, to 17,569 today.

“Japan going into a recession is a surprise and markets hate surprises,” Patrick Spencer, head of U.S. equity sales at Robert W. Baird & Co. in London, said in a telephone interview. “This is causing a short-term decline and is sentiment-driven on concerns about the global economy.”

- Advertisement -

Japan unexpectedly sank into a recession last quarter as it struggled to cope with April’s sales-tax increase. The world’s third-largest economy shrank an annualized 1.6 percent, after a revised slump of 7.3 percent in the previous three months. That missed projections for a 2.2 percent gain in the third quarter.

The S&P 500 climbed for a fourth week, taking its rebound from a six-month low in October to 9.5 percent. The S&P 500 has rallied to all-time highs as better-than-expected earnings and economic data have shored up confidence that the U.S. economy is able to weather a global slowdown even as the Federal Reserve winds down its bond-buying program.

Industrial output

Data today showed the Fed Bank of New York’s Empire Index increased less than forecast in November. The manufacturing gauge rose to 10.16, while economists were projecting 12.

U.S. industrial production rose 0.2 percent in October, compared with a 1 percent gain the previous month, according to economist estimates. The data are due at 9:15 a.m. in Washington.

Urban Outfitters Inc. and Agilent Technologies Inc. are among companies posting results today. Of the S&P 500 members that have reported this earnings season, 80 percent beat profit estimates and 60 percent surpassed revenue projections, according to data compiled by Bloomberg.

Pfizer retreated 1.7 percent to $29.82. The drugmaker now sees 2014 earnings per share of $1.40 to $1.49, compared with $1.50 to $1.59 previously. Pfizer cut its forecast to account for an upfront payment of $850 million for Merck’s cancer drug.

DreamWorks, Hasbro

DreamWorks dropped 13 percent to $22.55. Hasbro’s talks to acquire the studio that produced the “Shrek” films never advanced beyond a preliminary stage and a first meeting, according to a person with knowledge of the situation, who sought anonymity because the matter is private. Hasbro rose 3.7 percent to $56.

Baker Hughes, the third-biggest oil-field service company, jumped 16 percent to $69.30, while Halliburton, the second largest, slid 4.9 percent to $52.40. Halliburton will pay about $78.62 a share in cash and stock for Baker Hughes, the companies announced today.

Tyson Foods Inc. added 3.8 percent to $42.20. The company reported fourth-quarter earnings above analysts’ forecasts.

No posts to display