U.S. Stock-Index Futures Drop; Wal-Mart, UAL Fall in Europe By Daniela Silberstein
Oct. 17 (Bloomberg) -- U.S. stock futures fell, indicating the Standard & Poor's 500 Index may trim its biggest weekly gain since 2003, on speculation reports on consumer confidence and housing will add to evidence the economy is in a recession. Wal-Mart Stores Inc., the world's biggest retailer, slipped 2.1 percent in Germany before data that is expected to show consumer sentiment fell and housing starts declined to the lowest in 17 years. UAL Corp. retreated 3.4 percent as oil climbed for the first time in four days. Investors were whipsawed this week as governments injected $2 trillion to bail out banks amid growing signs the credit crisis will spur a contraction in the global economy. The S&P 500 posted its biggest gain since the 1930s on Oct. 13, before plunging the most since the crash on 1987 on Oct. 15 as retail sales had their steepest drop in three years. ``The market is expecting more bad news to come,'' said Felix Lanters, Amsterdam-based head of portfolio management at Theodoor Gilissen Bankiers, which has $13 billion in assets. ``The bottoming out of the housing market is going to be a major issue in restoring general confidence.'' Futures on the S&P 500 expiring in December lost 15.1 points, or 1.6 percent, to 925.90 at 11:46 a.m. in London. Futures on the Dow Jones Industrial Average dropped 152, or 1.7 percent, to 8,814. Nasdaq-100 Index futures fell 26.75, or 2 percent, to 1,296.25. Europe's Dow Jones Stoxx 600 Index added 1.6 percent, while the MSCI Asia Pacific Index rose 0.4 percent. Libor Falls U.S. futures pared their decline and European shares extended their gains after the London interbank offered rate, or Libor, that banks charge each other for overnight loans in dollars fell to the lowest level in four years, according to the British Bankers' Association. The S&P 500 has climbed 5.3 percent since Oct. 10, the biggest weekly advance since March 2003, as money-market rates dropped and prospects of a government bailout of bond insurers lifted financial shares. The measure is still down 36 percent in 2008 as losses and writedowns from mortgage-related investments at financial firms worldwide reached $660 billion. The benchmark for U.S. equities rose yesterday as oil's retreat below $70 a barrel sparked a rally in consumer companies. The index halted a two-day slump that threatened to erase almost all of the 12 percent gain in the S&P 500 on Oct. 13, when the market climbed on speculation the government's plan to shore up banks will ease the credit crisis. `Extreme Volatility' The stock market's wildest swings since 1929 may get even bigger as almost 80 million options expire today. The most widely owned S&P 500 options expiring this week are October 1,150 puts. The S&P 500's 18 percent retreat from that strike price profited buyers of those contracts, which increased almost sixfold in value this month. Even after yesterday's 4.3 percent surge, the index has slumped 22 percent in three weeks. The Chicago Board Options Exchange Volatility Index, a measure of expected share-price swings and option prices, surged to an intraday record 81.17 yesterday. ``We are seeing extreme volatility, and the market is not finding its moment,'' said Alberto Espelosin, who helps manage the equivalent of $7.7 billion at Zaragoza, Spain-based Ibercaja Gestion. ``I would expect with all the measures the government in the U.S. has taken to help indexes, in the long- term we will return to more normal levels of volatility. But that will not happen in the very short-term.'' Economic Reports The Reuters/University of Michigan preliminary estimate of October consumer sentiment, scheduled for release at 10 a.m., probably fell to 65 from 70.3 at the end of September, according to a Bloomberg News survey of economists. The Commerce Department's report, due at 8:30 a.m. in Washington, may show housing starts decreased 2.6 percent last month to an annual rate of 872,000, according to the median forecast in a Bloomberg survey. Wal-Mart lost $1.12 to $53.50 in Germany. UAL, parent of United Airlines, retreated 35 cents to $9.95. Crude oil for November delivery rose as much as 4.5 percent to $73.02 a barrel, rebounding from a 13- month low on the New York Mercantile Exchange. Google Inc. rallied $24.09 to $377.11. The company reported third- quarter profit, excluding some items, of $4.92 a share. That beat the $4.75 average analyst estimate in a Bloomberg survey. Google said customers are still buying Web ads even as the economy slows. Advanced Micro Devices Inc. climbed 39 cents to $4.51 in Germany. The second-largest maker of personal-computer processors posted a narrower loss in the third quarter. Sales, excluding a $191 million technology license payment, rose 1.7 percent to $1.59 billion. Profit Results The S&P 500 has fallen in 10 of the past 12 trading days as the earnings outlook for companies in the index deteriorated. Profits fell 45 percent on average for the 53 companies that reported third-quarter results from Oct. 7 through this morning, according to Bloomberg data. Wall Street analysts forecast a 7.5 percent drop in earnings in the third quarter in a Bloomberg survey last week. Analysts have maintained forecasts for record profits even as the seizure in credit markets caused banks to stop lending to each other, sent U.S. stocks to the worst week in 75 years and prompted unprecedented efforts to cushion global economies. To contact the reporter on this story: Daniela Silberstein in Zurich at [EMAIL PROTECTED] Last Updated: October 17, 2008 07:02 EDT --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
