U.S. Stock Futures Decline on Emerging-Market Currencies
By Inyoung Hwang Jan 24, 2014 8:46 AM ET
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U.S. stock-index futures retreated, with the Standard & Poor’s 500
Index heading for a second week of losses, amid a selloff in
emerging-market equities and currencies.
International Game Technology tumbled 12 percent after the maker of slot
machines posted first-quarter profit that missed analysts’ projections.
Microsoft Corp. (MSFT) gained 3.3 percent after the
world’s largest software maker reported record revenue that also exceeded
analysts’ estimates. Starbucks Corp. rose 1.4 percent after the coffee-shop
chain posted quarterly profit that beat forecasts.
Futures on the S&P 500 expiring in March retreated 0.5 percent to
1,815.7 at 8:44 a.m. in New York. The benchmark index has declined 0.6 percent
so far this week, heading for its first consecutive weekly losses since the
middle of December. Dow Jones Industrial Average (INDU)
contracts slid 73 points, or 0.5 percent, to 16,078 today.
“You’ve had a massive selloff in these emerging-market currencies,” Nick
Xanders, a London-based equity strategist at BTIG Ltd., said by telephone.
“Ruble, rupee, real, rand: they’ve all fallen and the main cause has been
tapering. A lot of companies that have benefited from emerging-markets
growth are now seeing it go the other way.”
The MSCI Emerging Markets Index slid 1.1 percent, extending its decline
for the year to 4.9 percent. A Bloomberg gauge tracking 20 emerging-market currencies fell to
the lowest level since April 2009. Russia’s ruble dropped 0.9 percent,
extending its depreciation this year to 4.6 percent. The Indian rupee
weakened 1.2 percent, while South
Africa’s rand sank 1 percent to its lowest since October 2008. The
Turkish lira plunged to a record low versus the U.S. dollar
and the euro.
Argentina’s Devaluation
The Argentinian peso slumped yesterday after the government allowed the
currency to devalue by reducing support in the foreign-exchange market.
Investors have lost confidence in some of the biggest developing nations,
extending the rout in emerging-market currencies that began last year when
the Federal
Reserve signaled it would slow the pace of its monthly purchases of
Treasuries and mortgage bonds.
Fed officials have been scrutinizing economic data to determine the
timing and pace of any reductions to their stimulus. The central bank,
which next meets Jan. 28-29, decided at its December meeting to start
cutting its monthly bond purchases by $10 billion to $75 billion.
The S&P
500 fell 0.9 percent yesterday and the Dow dropped to a one-month low
after a gauge of manufacturing activity in China (EC11FLAS) unexpectedly contracted.
Fed Stimulus
The benchmark index is down 1.1 percent for the year while the Dow has tumbled 2.3 percent. The S&P 500 rallied 30
percent to a record last year, the most since 1997. Three rounds of Fed
monetary stimulus have helped the S&P 500 rise 170 percent from a
12-year low in 2009.
The rally has boosted equity valuations to near the highest level since
2009. The S&P 500 trades at 15.5 times the estimated earnings of its members, more than the
five-year average multiple of 14.1, data compiled by Bloomberg show.
Ten companies in the S&P 500 (SPX), including Procter
& Gamble Co. and Bristol-Myers Squibb Co., reported results today. Of
the 121 index members that have released earnings so far this season, 73 percent have
beaten estimates for profit and 67 percent have exceeded sales projections,
according to data compiled by Bloomberg.
Per-share profit for companies in the benchmark probably climbed 6
percent in the fourth quarter, while sales increased 2.2 percent, according
to analysts surveyed by Bloomberg.
Slot Machines
International Game Technology tumbled 12 percent to $15.55. The Las Vegas-based
company posted earnings of 25 cents a share, missing the average analyst
estimate by 6 cent. It also reported revenue during the period of $541.2
million, falling short of the $556.7 million that analysts had projected.
Intuitive Surgical Inc. lost 6 percent to $412.47. The maker of a
robotic-surgery device reported that fourth-quarter sales of systems
decreased by 23 percent from a year earlier.
Microsoft gained 3.3 percent to $37.25 after reporting revenue that
climbed 14 percent to $24.5 billion in the three months ended Dec. 31. Analysts had predicted sales of $23.7 billion,
according to data compiled by Bloomberg. Customers flocked to game consoles
and cloud software last quarter, the company said.
Starbucks rose 1.4 percent to $74.40. The Seattle-based company reported
net income yesterday that climbed 25 percent, beating analysts’ estimates.
Juniper Networks Inc. (JNPR) rallied 5.9 percent to
$27.55. The networking-equipment maker reported sales that exceeded
analysts’ estimates. Revenue in the fourth quarter
increased 12 percent to $1.27 billion from $1.14 billion a year earlier,
the Sunnyvale, California-based company said yesterday in a statement.
Analysts had predicted sales of $1.22 billion.
McKesson Climbs
McKesson Corp. added 3 percent to $177.50. America’s largest drug
distributor said it will acquire Celesio AG just 10 days after a failed
tender offer for the European company. McKesson agreed to buy convertible
bonds issued by Celesio from hedge fund Elliott Management Corp. It also
struck a deal to buy Franz Haniel & Cie.’s majority holding for 23.50 euros a share, giving the
San Francisco-based company the ownership of more than 75 percent of
Celesio’s shares.
Bristol-Myers rose 1 percent to $54.50. The pharmaceutical company
reported quarterly earnings per share of 51 cents, beating the average
estimate of 43 cents in a Bloomberg survey.
To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net
To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net;
Lynn Thomasson at lthomasson@bloomberg.net
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