U.S. StockIndex Futures Rise; Dow Lilly Shares Advance
U.S. Stock-Index Futures Rise; Dow, Lilly Shares Advance
By Michael Patterson
Jan. 29 (Bloomberg) — U.S. stock-index futures rose after
faster-than-forecast growth in durable goods orders and earnings
that topped analyst estimates at Dow Chemical Co. and Eli Lilly
%26amp; Co. quelled concern the economy will slip into recession.
Dow, the largest U.S. chemical maker, climbed after posting
record sales on higher prices. Lilly, the world;s biggest maker
of psychiatric drugs, posted a six-fold gain in profit on higher
sales of Cymbalta and Cialis pills.
Standard %26amp; Poor;s 500 Index futures expiring in March added
8.9 to 1,363.5 at 9:19 a.m. in New York. Dow Jones Industrial
Average futures gained 65 to 12,442. Nasdaq-100 Index futures
climbed 12 to 1,822.25. Shares gained in Asia and Europe, led by
industrial and mining companies.
“We;re looking, really, still for double-digit gains in
2008;; for stocks, William Stone, who helps oversee $77 billion
as chief investment strategist at PNC Wealth Management in
Philadelphia, said in a Bloomberg Television interview. “We can
get there once the intense fear and the hugely negative
sentiment comes off.;;
U.S. index futures doubled their gains after the Commerce
Department reported a 5.2 percent increase in durable goods
orders last month, the biggest since July. The growth highlights
how growing demand from overseas may boost manufacturers as the
U.S. economy slows. The Federal Reserve is expected to provide a
boost to growth with an interest-rate cut tomorrow.
Fourth quarter earnings have advanced 23 percent on average
for the 133 non-financial companies in the S%26amp;P 500 that have
reported results so far, according to data compiled by
Bloomberg.
Dow, Lilly
The S%26amp;P 500 has dropped 7.8 percent this year on concern a
slowdown in the world;s largest economy will lead to the biggest
decline in quarterly profits since 2001.
Dow added 95 cents to $38.54. The maker of 3,200 products
ranging from synthetic latex to pesticides posted profit
excluding some restructuring costs and other items of 84 cents,
topping the 80-cent average estimate of 14 analysts surveyed by
Bloomberg.
Eli Lilly %26amp; Co. rallied $1.11 to $51.40. Excluding certain
items, Lilly earned 90 cents a share, a penny higher than the
average estimate of 17 analysts surveyed by Bloomberg.
The Federal Open Market Committee is due to announce its
decision on interest rates in Washington tomorrow. Traders see a
74 percent chance the central bank will lower its benchmark rate
by a 0.5 percentage point to 3 percent, down from 86 percent
odds yesterday, according to Fed funds futures trading. As of a
week ago, no investors expected a cut to 3 percent. The rest of
the bets are for a quarter-point cut.
Housing Slump
Home prices in 20 U.S. metropolitan areas fell in November
for the 11th month in a row, as foreclosures and a slump in
sales added to the glut of unsold properties. Prices fell 7.7
percent from a year earlier, according to the S%26amp;P/Case-Shiller
home-price index. The decline is the biggest since the 20-city
index was started in 2000.
The Conference Board may report at 10 a.m. that its
consumer confidence index fell to 87 this month, the lowest
since October 2005, according to economists surveyed.
President George W. Bush last night in his State of the
Union address urged Congress to set aside election-year politics
to quickly approve a stimulus plan amid growing signs of an
economic slowdown. He called for passage of the $150 billion
package of rebates for individuals and tax breaks for businesses
and warned lawmakers against altering the compromise reached
after extensive bipartisan negotiations.
Bad Debts
American Express Co. retreated 46 cents to $46.94. The
third-largest U.S. credit-card network said fourth-quarter
profit fell 9.9 percent to $831 million. The company took a $274
million after-tax charge in the quarter as it more than doubled
the amount set aside for U.S. credit card losses to $1.14
billion from $530 million a year earlier.
The American Express report adds to evidence that bad debts
are spreading in the U.S. from borrowers in the housing market
to customers who owe money on credit cards and auto loans.
Citigroup Inc., the biggest U.S. bank by assets, and Capital One
Financial Corp. each doubled reserves for loan losses in the
fourth quarter.
SanDisk Corp. fell 92 cents to $24.97 after the biggest
maker of digital-camera memory chips said it expects revenue of
as much as $875 million in the first quarter. That trailed the
average estimate of $989.6 million by analysts in a Bloomberg
survey.
The MSCI World Index added 0.7 percent to 1,453.46. All 18
markets in western Europe advanced, after shares in the region
declined yesterday. The MSCI Asia Pacific Index increased 1.3
percent.
To contact the reporter on this story:
Michael Patterson in New York at
