U.S. stock futures rise as concern over Europe’s crisis eases

U.S. STOCK FIGURES advanced, indicating the Standard & Poor’s 500 Index will snap three days of losses, as concern over Europe’s debt crisis eased after the region’s officials took steps to protect Spanish banks.
Posted 7/10/12

NEW YORK - U.S. stock futures advanced, indicating the Standard & Poor’s 500 Index will snap three days of losses, as concern over Europe’s debt crisis eased after the region’s officials took steps to protect Spanish banks.

Alcoa Inc., the largest U.S. aluminum producer, rose 0.6 percent as earnings and revenue beat estimates. Advanced Micro Devices Inc., the second-biggest maker of processors for personal computers, fell 9.4 percent after reporting an unexpected drop in sales. Intel Corp. slid 1.2 percent after the world’s largest semiconductor maker agreed to invest as much as $4.1 billion in Dutch chip-equipment maker ASML Holding NV.

S&P 500 futures expiring in September rose 0.1 percent to 1,350.60 at 8:36 a.m. New York time, after advancing as much as 0.4 percent earlier. Dow Jones Industrial Average futures added 25 points, or 0.2 percent, to 12,710 today.

Equities advanced as European governments will jump-start as much as 100 billion euros ($123 billion) in emergency loans to shore up Spain’s banks and may move the costs off the Spanish government’s balance sheet. Finance chiefs agreed to make available 30 billion euros by the end of this month. The goal is to eventually use the euro-area bailout fund to recapitalize banks directly instead of saddling the government with debt.

Investors are also gauging the impact of Europe’s crisis on corporate earnings. Profits for S&P 500 companies fell 1.8 percent in the second quarter, according to analyst estimates compiled by Bloomberg. That would be the first year-over-year drop since 2009, even as revenue rose 2.5 percent.

Stocks fell for a third day yesterday after a jump in Spanish bond yields above 7 percent intensified concern about Europe’s crisis and as investors awaited Alcoa’s results.

Alcoa’s results

Alcoa, the first company in the Dow to report results, added 0.6 percent to $8.81. Chief Executive Officer Klaus Kleinfeld reiterated Alcoa’s forecast for global aluminum demand to rise 7 percent this year and exceed supply. The units that make the metal for customers such as Boeing Co. and Ford Motor Co. have seen higher profitability, helping to counter the weaker performance of its aluminum-smelting business.

AMD slumped 9.4 percent to $5.09. Demand for its products is being hurt by slower growth in China and a worsening economic climate in Europe. The chipmaker is also suffering as consumers shun PCs in favor of tablets, which rely on semiconductors made by other companies. AMD’s sales drop may be a harbinger of disappointing results at peers, such as Intel, said Stacy Rasgon, an analyst at Sanford C. Bernstein & Co.

Intel slid 1.2 percent to $25.85. The investment in ASML is an effort to shave two years from the time to adopt new production techniques.

Earnings estimates

Reluctance among U.S. companies to push earnings estimates higher in the second quarter indicated the period’s results may be disappointing, according to Pierre Lapointe, Brockhouse & Cooper Inc.’s global macro strategist.

Only 19 companies made profit projections last month that beat analysts’ average estimate, according to data compiled by Bloomberg and summarized by Brockhouse in a July 5 report. The total was the lowest for any June since the figures were first compiled in 2000 and the second-lowest for any month after the 14 last September.

“Investors did not get many indications from companies on the strength of earnings,” Lapointe, who is based in Montreal, wrote with colleagues Alex Bellefleur and Frances Donald. “The risk is that we will get more earnings misses than usual.”

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