U.S. Stock Futures Little Changed on Employment Report
<cite class="byline" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 11px; vertical-align: baseline; background-color: transparent; width: 640px; color: rgb(111, 111, 111); display: block; font-style: normal; line-height: 1.3em; position: static !important; background-position: initial initial; background-repeat: initial initial;">By Katie Brennan & Lu Wang - Aug 2, 2013 9:17 PM GMT+0800</cite>
U.S. stock-index futures were little changed, after the Standard & Poor’s 500 Index rose to a record yesterday, as employers added fewer workers than anticipated in July even as the jobless rate dropped to 7.4 percent.
Chevron Corp. slipped 1 percent as net income fell for a second straight quarter. American International Group Inc. (AIG) rallied 4.5 percent after saying it will pay its first dividend since 2008 and authorizing a share buyback of as much as $1 billion. LinkedIn Corp. (LNKD) surged 9.5 percent after increasing its full-year sales forecast. Dell Inc. advanced 5.2 percent as the computer maker was said to be near a buyout deal.
S&P 500 futures expiring next month fell less than 0.1 percent to 1,700 at 9:15 a.m. in New York, after rallying 1.3 percent yesterday. Contracts on the Dow Jones Industrial Average lost 12 points, or 0.1 percent, to 15,538 today.
“This number isn’t an earth-shaker,” John Manley, who helps oversee $222.7 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. “It is debatable if it was good or bad. It was OK. The number still indicates the Fed is going to be there for a while, that is not bad.”
The 162,000 increase in payrolls last month was the smallest in four months and followed a revised 188,000 rise in June that was less than initially estimated, Labor Department figures showed today in Washington. The median forecast of 93 economists surveyed by Bloomberg called for a 185,000 gain. Workers spent fewer hours on the job and hourly earnings fell for the first time since October. The unemployment rate was forecast to drop to 7.5 percent from 7.6 percent, according to the Bloomberg survey median.
Consumer Spending
Another report showed consumer spending in the U.S. rose in line with forecasts in June as Americans’ incomes grew. Household purchases, which account for about 70 percent of the economy, rose 0.5 percent, after a 0.2 percent increase the prior month that was less than previously estimated, the Commerce Department reported today in Washington. The median forecast in a Bloomberg survey of economists called for a 0.5 percent rise.
The equity benchmark climbed above the 1,700 level yesterday for the first time as central banks vowed to maintain stimulus efforts and data on global manufacturing beat forecasts. TheS&P 500 is trading at 15.5 times projected earnings, compared with an average of 13.9 over the last five years, according to data compiled by Bloomberg.
Market Rally
Three rounds of bond purchases by the Fed, coupled with improving earnings and economic growth, has helped propel the S&P 500 up 152 percent from its bear-market low in 2009. Speculation about the Fed’s monthly bond purchases has whipsawed stocks since May, when Chairman Ben S. Bernanke first indicated policy makers could begin reducing the stimulus this year if the job market continues to improve.
Fed officials said this week the labor market has shown “improvement,” while a report showed the U.S. economy grew more than projected in the second quarter. The central bank may begin tapering the pace of its asset purchases in September, according to a growing number of economists surveyed by Bloomberg from July 18 to July 22.
“The market will read today’s jobs report as part of the mixed data that’s shaping the Fed’s policy,” Stephen Wood, the New York-based chief market strategist who helps oversee about $237 billion at Russell Investments. “The pattern of economic growth looks more lumpy coming into this quarter. The market is going to turn its focus back to the earnings season and look at the revenue guidance with a microscope.”
Earnings Season
Chevron Corp. and Berkshire Hathaway Inc. are among nine S&P 500 companies reporting results today. Of the 390 companies in the gauge to have already reported quarterly earnings, 74 percent have exceeded analysts’ profit estimates and 56 percent have beaten sales projections, data compiled by Bloomberg show.
Chevron slipped 1 percent to $125.12. The world’s second-largest energy company by market value said net income fell as crude oil prices declined and output from the company’s wells dropped.
AIG jumped 4.5 percent to $49.20. The insurer that repaid a government bailout last year announced a quarterly dividend of 10 cents a share. It also posted net income that climbed 17 percent to $2.73 billion in the second quarter.
LinkedIn surged 9.5 percent to $233.27. The operator of the biggest online professional-networking service also said revenue jumped 59 percent to $363.7 million in the second quarter. That exceeded the average analyst estimate of $354.3 million.
Dell, Viacom
Dell increased 5.2 percent to $13.63. A person familiar with the matter said that Michael Dell andSilver Lake Management LLC are nearing an agreement with the computer maker’s board to acquire the company. The bid has increased to $13.75 a share and includes a special dividend of 13 cents, said the person who asked not to be identified because the talks are confidential. Dell and Silver Lake had offered $13.65.
Viacom Inc. jumped 7 percent to $79.57. The owner of cable networks MTV and Nickelodeon boosted its stock-buyback program to $20 billion from $10 billion. The company missed fiscal third-quarter profit estimates as rising fees from pay-TV operators and higher advertising sales only partly offset increasing expenses.
To contact the reporters on this story: Katie Brennan in New York [email protected]; Lu Wang in New York at [email protected]
To contact the editors responsible for this story: Andrew Rummer at [email protected]; Lynn Thomasson at [email protected]
