U.S. Index Futures Decline After Weekly Gain for Equities

New York (Oct 27)   U.S. stock-index futures fell, after equities posted their biggest weekly gain since January 2013, as investors weighed earnings to gauge how well the economy is coping with the cut in Federal Reserve stimulus.

Merck & Co. erased its advance in early New York trading after posting third-quarter results and narrowing its predicted range for full-year earnings. Thirteen companies listed on the Standard & Poor’s 500 Index including Allergan Inc. and Seagate Technology Plc report quarterly results today.

Futures on the S&P 500 (SPX) expiring in December slid 0.2 percent to 1,955.9 at 7:37 a.m. in New York. The equity gauge halted a four-week slide amid better-than-estimated earnings and data signaling a strengthening economy even as the Fed prepares to end its bond purchases. Dow Jones Industrial Average contracts lost 20 points, or 0.1 percent, to 16,716 today.

“Earnings will continue to be the focus of investors this week along with any further commentary from the Fed,” said Patrick Spencer, head of U.S. equity sales at Robert W. Baird & Co. in London, in a phone interview. “Earnings so far have been reasonable. The Fed continues to be supportive and we are entering a seasonally strong time of year for the market.”

Of the S&P 500 companies that have reported earnings so far, 80 percent have beaten earnings estimates and 60 percent surpassed revenue projections, according to data compiled by Bloomberg. Profit for the index’s members rose 6.3 percent in the third quarter and sales increased 4.1 percent, analysts predicted.

Home Sales

A report at 10 a.m. in Washington may show that contracts to purchase previously owned houses increased 1 percent in September, after declining 1 percent the previous month, according to economists surveyed by Bloomberg. Another release may show growth in services activity slowed down this month.

Merck was little changed in premarket trading, erasing earlier gains, after reporting third-quarter profit that beat estimates. The company also said it expects full-year earnings of $3.46 to $3.50 a share, compared with its previous prediction for $3.43 to $3.53.

Novavax Inc. climbed 11 percent to $5.69 in early New York trading after the biotechnology company presented data on a nanoparticle vaccine.

Halliburton Co. lost 1.1 percent to $55.17 in early trading after Goldman Sachs Group Inc. removed the stock from its “conviction buy” list.

Source: Bloomberg