U.S. Stock Index Futures Advance as Ukraine Begins Truce Talks

New York (Aug 18)  U.S. stock-index futures advanced, after the Standard & Poor’s 500 Index posted its biggest weekly gain since July, as diplomats from Ukraine and Russia discussed a possible truce.

Dollar General Corp. surged 7.9 percent in early New York trading after offering $9.7 billion for Family Dollar Stores Inc. Family Dollar rallied 4.8 percent. Monster Beverage Corp. (MNST) declined, indicating it may fall from its highest price in at least 24 years, after Jefferies Group LLC downgraded the shares.

S&P 500 (SPX) futures expiring next month climbed 0.5 percent to 1,962.8 at 7:43 a.m. in New York. The gauge gained 1.2 percent last week as concern eased over the conflict between Russia and Ukraine, and as a slowdown in retail sales boosted speculation that the Federal Reserve won’t raise rates sooner than anticipated. It closed 1.7 percent below its record reached on July 24. Dow Jones Industrial Average contracts added 87 points, or 0.5 percent, to 16,718 today.

“We’ve seen very good earnings, and geopolitical tensions are not as elevated at the moment,” Patrick Spencer, head of U.S. equity sales at Robert W. Baird & Co., said by phone. “There’s been a lot of talk about a correction for equities, but markets are already a couple of points off their highs.”

Of the S&P 500 companies that have reported quarterly results this season, 76 percent have topped earnings estimates, while 65 percent exceeded sales projections, according to data compiled by Bloomberg.

Easing Tension

Ukrainian Foreign Minister Pavlo Klimkin met his Russian counterpart Sergei Lavrov for more than five hours of talks in Berlin, as they sought to ease tension after officials in Kiev said troops had partially destroyed an armed convoy from Russia.

Ukraine also agreed to allow trucks that Russia says is carrying humanitarian aid into territory held by pro-Russian separatists. The former Soviet republic said it will let the supplies cross the border under supervision of the International Committee of the Red Cross.

Dollar General jumped 7.9 percent to $62 as it proposed to pay $78.50 a share in cash for Family Dollar, challenging Dollar Tree Inc.’s takeover bid of $74.50 a share in cash and stock. Dollar General forecast synergies of as much as $600 million on an annual basis, three years after completion of the deal.

Family Dollar shares added 4.8 percent to $79.70 in early trading, while Dollar Tree fell 1.8 percent to $54.60.

Time Warner Inc. climbed 1.6 percent to $77.74. The stock has fallen 7.9 percent this month following 21st Century Fox Inc.’s decision to withdraw its $75 billion takeover offer.

Monster Beverage lost 0.9 percent to $92.67 after Jefferies downgraded the stock to hold from buy, saying it is fully valued. Monster Beverage surged 30 percent on Aug. 15 after Coca Cola Co. agreed to buy a stake, pushing its valuation to 36.1 times estimated earnings. That compares with a five-year average multiple of 24.7.

Source: Bloomberg