U.S. Stock-Index Futures Advance; CIT, Home Depot Shares Gain
U.S. stock futures rose, signaling the Standard & Poor’s 500 Index may rebound from four weeks of losses, as analyst upgrades of companies from Home Depot Inc. to Walt Disney Co. offset concern over deteriorating government finances in Europe.
Home Depot, the largest home-improvement retailer, and Walt Disney, the biggest media company, rose at least 0.7 percent. CIT Group Inc. jumped 4.1 percent after naming former Merrill Lynch & Co. chief John Thain chairman as chief executive officer.
Standard & Poor’s 500 Index futures expiring in March climbed 0.3 percent to 1,062.5 at 9:15 a.m. in New York. Dow Jones Industrial Average futures increased 0.1 percent to 9,955 while Nasdaq-100 Index futures rose 0.1 percent to 1,747.25.
“The decline of last week was overdone,” said Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which manages $8.5 billion. “There’s nothing in the U.S. market that justified last week’s selloff. The U.S. is emerging as more stable. The economy and corporate earnings are improving.”
U.S. stocks have retreated for four straight weeks, the longest losing streak since July. Stocks rallied in the final hour of trading on Feb. 5, with the Dow Jones Industrial Average erasing a 167-point drop, on speculation the European Union would devise a solution for the budget deficits.
European Central Bank President Jean-Claude Trichet said the ECB is “confident” Greece will cut its deficit below the limit of 3 percent of gross domestic product in 2012 from 12.7 percent.
“The European members of the G-7 will make sure it is managed,” French Finance Minister Christine Lagarde told reporters on Feb. 6 after meeting counterparts and central bankers from the Group of Seven in Iqaluit, Canada.
The S&P 500 has still surged 58 percent from a 12-year low on March 9 as governments and central banks globally maintained low interest rates and committed more than $12 trillion to stimulate economic growth.
The Group of Seven finance ministers pledged to press ahead with economic stimulus measures even as investors intensify their focus on mounting budget deficits.
“We need to continue to deliver the stimulus to which we are mutually committed and begin looking at exit strategies to move to a more sustainable fiscal track,” Canadian Finance Minister Jim Flaherty told reporters yesterday.
The U.S. is in no danger of losing its Aaa debt rating, Treasury Secretary Timothy F. Geithner said in an ABC News interview broadcast yesterday.
Even so, UBS AG advised clients to further reduce their holdings in equities for a second time in as many weeks. Economist Larry Hatheway and strategist Kenneth Liew reduced their equity allocation to “neutral” from “a small overweight,” saying “resolution of the challenges facing Greece, Portugal and Spain is likely to take time and as a result risk premiums will remain elevated.”
CIT Group jumped 4.1 percent to $32. Thain, the ousted chief of Merrill Lynch, was named to lead the commercial lender that emerged from bankruptcy in December after almost a four- month search for a replacement.
Home Depot gained 1.7 percent to $28.45. The retailer was raised to “overweight” from “equal-weight” at Morgan Stanley.
Walt Disney added 0.7 percent to $29.75. The shares were raised to “neutral” from “underweight at JPMorgan Chase & Co.
Motorola Inc. climbed 2.3 percent to $6.55. The mobile- phone maker may rise as much as 40 percent during the next year if it spins off its mobile-phone unit and revenue from the radio and data-communications equipment division increases, Barron’s reported.