U.S. Stock Futures Advance Before Fed’s Policy Decisions
U.S. stock-index futures advanced, indicating the Standard & Poor’s 500 Index will rebound from two days of declines, as investors awaited the outcome of the Federal Reserve’s two-day policy meeting.
Dow Chemical Co. (DOW) rose 2.6 percent in Germany. Electronic Arts Inc. (EA) gained 1.9 percent after reporting a quarterly loss that was smaller than estimated. Dreamworks Animation SKG Inc. (DWA) fell 8.9 percent after second-quarter earnings missed projections.
Futures on the S&P 500 Index expiring in September climbed 0.3 percent to 1,378.1 at 7:38 a.m. in New York. The equity benchmark rallied 1.3 percent in July, its second successive month of gains, as euro-area policy makers pledged to preserve their common currency and speculation grew central banks will take measures to boost growth. Dow Jones Industrial Average futures added 39 points, or 0.3 percent, to 12,998 today.
Trading in Europe slowed before the Fed’s decision. The number of shares changing hands in Stoxx 600 companies was 35 percent lower than the 30-day average at this time of day, according to data compiled by Bloomberg.
Fed Chairman Ben S. Bernanke will probably forgo announcing a third round of large-scale asset purchases today, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt, according to median estimates of economists in a Bloomberg News survey.
“Bernanke will leave the door open,” Larry Kantor, head of research at Barclays Capital, said on Bloomberg Television’s City Central. “He doesn’t want to disappoint market expectations too much but I don’t see the Fed making any move at all this week.”
Eighty-eight percent of economists say the Federal Open Market Committee will refrain from starting new purchases. Forty-eight percent say the FOMC will announce the buying at its Sept. 12-13 meeting, according to the July 25-27 survey of 58 economists.
Investors should buy stocks before the Fed’s announcement, if history is any guide, according to Bespoke Investment Group LLC. The S&P 500 (SPX) has advanced on 20 out of the past 29 decision days since the Fed pledged to keep interest rates near zero in December 2008, a Bespoke study showed. Fed days accounted for about 38 percent of the equity gauge’s gain during the period, the data show.
A report at 10 a.m. in Washington may show the Institute for Supply Management’s factory index rose to 50.2 last month from 49.7 in June, according to the median estimate of 83 economists surveyed by Bloomberg News. Fifty marks the dividing line between expansion and contraction.
Companies probably added 120,000 jobs in July, after hiring 176,000 in June, according to the median estimate of economists surveyed by Bloomberg before ADP Employer Services releases its data today.
Dow Chemical, the biggest U.S. chemical company, rose 2.6 percent to $29.53 in German trading. A gauge of its European peers climbed 0.8 percent. Dow shares have fallen for the past four days in New York.
Electronic Arts gained 1.9 percent to $11.23 in German trading. The second-largest U.S. video-game maker reported a smaller quarterly loss than analysts expected and said it will buy back as much as $500 million in stock.
Allstate Corp. (ALL) may be active. The largest publicly traded U.S. home and auto insurer posted second-quarter profit that exceeded analysts’ estimates as costs tied to natural disasters dropped.
Dreamworks tumbled 9 percent to $17.48 in Germany. The independent film studio reported second-quarter results that missed analysts’ estimates on lower-than-expected results related to “Madagascar 3.”
Net income shrank 63 percent to $12.8 million, or 15 cents a share. Analysts projected 25 cents, according to a Bloomberg survey.
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