U.S. equities slide on Eurozone mess

February 9, 2015 09:04 AM

U.S. stock-index futures fell, following the Standard & Poor’s 500 Index’s best weekly gain since December, after Greece’s prime minister reiterated pledges opposing the nation’s bailout.

Contracts on the S&P 500 Index expiring in March slipped 0.5% to 2,042.60 at 8:30 a.m. in New York. Dow Jones Industrial Average futures dropped 87 points, or 0.5%, to 17,695. On Friday, the underlying indexes reversed intraday gains that put them within 1% of records reached in December, closing 0.3% lower.

Greek Prime Minister Alexis Tsipras vowed on Sunday to negotiate an end to austerity measures, fueling concern about a confrontation with the nation’s international creditors. Separately, Russia’s foreign minister warned the U.S. that supplying arms to Ukraine may deepen a conflict.

“We had the earnings season and that is done and dusted, and now it’s Europe that may step in with noise about the negotiations about Greece and about Ukraine,” said Christian Gattiker, head of research at Julius Baer Group Ltd. in Zurich. “All the Greece debate and the uncertainty about the euro zone is certainly not good news for global sentiment.”

The S&P 500 rose 3% last week, the most in seven weeks, as crude oil rebounded. The benchmark gauge erased its losses for 2015 on Feb. 5, after posting its worst month in a year. Stocks fell in January amid concern that slowing growth overseas will hurt the U.S. economy, while tumbling crude oil and the strengthening dollar weighed on earnings at multinational corporations.
 

Earnings Reports

Coca Cola Co., Time Warner Inc. and MetLife Inc. are among 66 S&P 500 companies reporting quarterly results this week. Of the firms that have reported profit so far this season, 78% beat analysts’ estimates, while 56% topped sales projections, data compiled by Bloomberg show.

The S&P 500 rose as much as 0.5% Friday after the government’s report showed the U.S. added more jobs than forecast in January, capping the biggest three-month gain in 17 years, and workers’ earnings jumped. The Dow posted its best weekly gain in more than a year.

The S&P 500 has reached a level, relative to sales, that hasn’t been seen since the aftermath of the Internet bubble, even as price-earnings ratios hover around historical averages. Signals emanating from the two indicators are diverging more than any time since at least 1993 and highlight how badly investors need economic data to extend the rally.

Motorola Solutions Inc. rose 7.5% in early New York trading after people familiar with the matter said it is exploring a sale.

Qualcomm Inc. added 2.5%. The chipmaker is close to a $1 billion deal to resolve a Chinese government investigation into anti-competition practices, Reuters said, citing unnamed people familiar with the matter. The fine may be more than 10 billion yuan ($1.6 billion), the state-run Securities Times reported.
 

Hasbro Profit

Hasbro Inc. gained 3.9% as the world’s second- largest publicly held toymaker posted fourth-quarter profit that topped analysts’ estimates.

Apple Inc. slipped 0.2%. The Swiss National Bank reduced the number of shares it held in the world’s biggest company in the fourth quarter, a U.S. regulatory filing showed. Separately, Apple hired banks to arrange its first sale of bonds in Swiss francs, a person familiar with the matter said.

Twitter Inc. fell 2%. Shares surged 16% on Friday after the microblogging service provider reported better- than-forecast quarterly revenue.

Alcoa Inc. declined 2.3% as JPMorgan Chase & Co. downgraded shares of the largest U.S. aluminum producer to neutral from overweight, similar to buy.

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