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U.S. Stock-Index Futures Drop on Earnings, Euro-Area Deficits

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April 22 (Bloomberg) -- U.S. stock futures fell as forecasts at technology companies trailed estimates and a surge in the euro region’s budget deficits reignited concern that mounting government debt may derail the economic recovery.

Qualcomm Inc. plunged 6.9 percent as the biggest maker of chips that run mobile phones forecast sales and profit for this quarter that fell short of analysts’ predictions. EBay Inc. sank 8.3 percent after its forecast for second-quarter profit missed estimates as customers switched to competitors. Philip Morris International Inc. dropped 2.8 percent as earnings trailed analysts’ forecasts.

Futures on the Standard & Poor’s 500 Index expiring in June slid 0.5 percent to 1,194.3 at 8:36 a.m. in New York, while Dow Jones Industrial Average futures fell 36 points, or 0.3 percent, to 11,023. Futures on the Nasdaq-100 Index dropped 0.6 percent to 2,013.

“Greece is back in the headlines,” said Joseph Saluzzi, co-head of equity trading at Chatham, New Jersey-based Themis Trading LLC. “At some point, we’d see the deficit concern coming back to haunt us. Qualcomm and EBay’s numbers disappointed. Stock prices have run too far and you’d need to have earnings to support them.”

The European Union said today Greece’s deficit was 13.6 percent of gross domestic product last year, higher than the government’s April 7 forecast of 12.9 percent, and could top 14 percent as “off-market swaps” cloud its estimates. Ireland overtook Greece as the EU nation with the largest shortfall, which was revised up to 14.3 percent.

Greek Debt

Greek bond yields have jumped to the highest in more than a decade on concern that the nation’s surging budget deficit will leave the country struggling to finance its debt. The cost of one-year default insurance on the country’s debt jumped 112 basis points to a record 752 today, according to CMA DataVision.

Futures maintained declines as government data showed the number of claims for unemployment benefits fell last week as the rebounding economy prompted companies to cut fewer jobs. Initial jobless applications dropped by 24,000 to 456,000 in the week ended April 17, the Labor Department said.

A separate report showed wholesale prices in the U.S. rose more than forecast in March, boosted by higher costs for energy and the biggest gain in food since 1984. The 0.7 percent increase in prices topped the median economist estimate of a 0.5 percent increase.

‘Risky Decisions’

President Barack Obama is due to make a speech today in which he will take aim at “risky decisions” made on Wall Street, according White House press secretary Robert Gibbs. The address, scheduled to begin at 11:55 a.m. at New York’s Cooper Union, is intended to build momentum for legislation to overhaul U.S. financial regulations.

Qualcomm dropped 6.9 percent to $39.70. The company projected profit of 40 cents to 44 cents a share for this quarter. Analysts predicted 44 cents, according to the average estimate in a Bloomberg survey.

EBay retreated 8.3 percent to $24.12 after the owner of an e-commerce marketplace and the PayPal online payment service said second-quarter profit will be 37 cents to 39 cents a share, excluding one-time items. Analysts in a Bloomberg survey had estimated 40 cents on average.

Philip Morris fell 2.8 percent to $51.53. The world’s largest publicly traded tobacco maker reported first-quarter profit of 90 cents a share on an adjusted basis. Analysts surveyed by Bloomberg had estimated profit of 93 cents on average.

About 83 percent of S&P 500 companies that have reported first-quarter results beat the average analyst earnings estimate, according to data compiled by Bloomberg, which could mark a record proportion in data going back to 1993.

A report later this morning may show sales of U.S. previously owned homes rose in March for the first time in four months. The National Association of Realtors’ report, due at 10 a.m. in Washington, may show purchases of previously owned homes rose 5.3 percent, according to a survey of economists.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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