U.S. stock futures drifted between gains and losses as a bigger-than-projected decrease in jobless claims and takeover speculation among commodities producers was offset by concern CIT Group Inc. will file for bankruptcy.
Big Lots Inc. and U.S. Airways Group Inc. led gains in consumer shares as the number of Americans filing claims for unemployment benefits fell last week to the lowest level since January. Financial shares dropped as CIT, the commercial lender running short of cash, said it probably won’t receive a federal bailout and JPMorgan Chase & Co. said its credit-card business is unlikely to make money in 2010. Mosaic Co. rallied 11 percent on a report Vale SA is may bid for the fertilizer producer.
The drop in jobless claims gave equities “a short-term bounce, and now reality’s setting in and there’s more focus on what’s going on in other areas, like CIT and the ramifications thereof,” said Gary Wolfer, who helps oversee $1 billion at Univest Wealth Management & Trust Services in Souderton, Pennsylvania.
Futures on the S&P 500 expiring in September fell less than 0.1 percent to 926.8 at 9:15 a.m. in New York after gaining as much as 0.6 percent. Dow Jones Industrial Average futures added 0.2 percent to 8,557. Nasdaq-100 Index futures fell 0.3 percent to 1,492.5. European and Asian shares advanced.
U.S. stocks rallied yesterday, sending the Dow Jones Industrial Average to its biggest gain in three months, after Intel Corp. forecast sales that beat analysts’ estimates and gauges of manufacturing improved.
Rally This Week
The S&P 500 has risen 6.1 percent so far this week as better-than-estimated retail sales boosted consumer shares and companies from Goldman Sachs Group Inc. to Intel Corp. and Johnson & Johnson reported earnings that beat analysts’ estimates. The benchmark index for U.S. equities has rallied 38 percent from its 12-year low on March 9 amid speculation the economic contraction is slowing.
Analysts estimate profits at S&P 500 companies fell an average 35 percent in the second quarter and will decrease 21 percent from July through September, according to data compiled by Bloomberg.
JPMorgan slid 1.8 percent to $35.62. The second-largest U.S. bank probably won’t make money from its credit card business next year, Chief Executive Officer Jamie Dimon said on a conference call. Credit card services account for about a quarter of the company’s revenue, according to Bloomberg data.
Earlier, the shares rose as the company posted better-than- expected second-quarter results. Profit climbed 36 percent, surpassing analysts’ estimates as investment-banking fees rose to a record.
CIT Concern
Shares of CIT, the 101-year-old commercial lender, were suspended in late trading yesterday. The company said “there is no appreciable likelihood of additional government support being provided over the near term.” The New York-based company, once the biggest independent commercial lender, faces bankruptcy if no federal aid emerges, Standard & Poor’s said earlier this week.
Mosaic Co., which is majority owned by Cargill Inc., surged 9.8 percent to $48.90 as O Estadao de S. Paulo reported Vale SA, Brazil’s largest mining company, is considering bidding for the North American fertilizer producer in a deal valued at $25 billion, without saying where it got the information.
General Electric Co. slipped 1.8 percent to $12.02. The company, considered an economic bellwether for the U.S., probably will say second-quarter profit fell by more than 50 percent as industrial and finance earnings sagged when it reports earnings tomorrow.
Earnings Watch
Google Inc., owner of the most-visited Internet search engine, and International Business Machines Corp., the world’s biggest computer-services provider, will post results after the market closes. Google shares decreased 0.4 percent to $438.60.
Motorola Inc. slumped 5.3 percent to $6.26. The biggest U.S. mobile-phone maker was downgraded to “neutral” from “buy” by Goldman Sachs Group Inc., which said the stock’s price already reflected the prospect that the company’s handset business may break even next year.
Finnish rival Nokia Oyj, the world’s largest mobile-phone maker, reported sales that trailed analysts’ estimates.
SOURCE: Bloomberg
