U.S. Stock-Index Futures Advance; Procter & Gamble, AIG Climb

By Adam Haigh and Elizabeth Stanton

Aug. 5 (Bloomberg) -- U.S. stock-index futures gained, indicating the Standard & Poor's 500 Index may rebound from three days of losses, as investors speculated earnings will continue to beat estimates and oil dropped to $118 a barrel.

Procter & Gamble Co., the world's largest consumer-products company, rose after posting profit that topped projections. American International Group Inc. rallied on UBS AG's recommendation to buy the shares before the world's largest insurer reports results tomorrow. General Motors Corp. advanced as crude slumped for a second day. The Federal Reserve is scheduled to announce its decision on interest rates.

Futures on the S&P 500 Index expiring in September added 7.8 to 1,256.6 at 8:29 a.m. in New York. Dow Jones Industrial Average futures climbed 71 to 11,342. Nasdaq-100 Index futures increased 13.75 to 1,825.5.

Outside the financial industry, ``earnings haven't been quite as bad as many anticipated,'' said Chirin Gill, a fund manager at Daiwa SB Investments in London, which has about $60 billion. ``A slightly-better-than-expected earnings season does help sentiment but there are still a number of risks hanging over the markets that investors are acutely aware of.''

The S&P 500 is down almost 15 percent this year on concern record oil prices and more than $480 billion in global credit losses and asset writedowns will push the U.S. economy into recession and curb profit growth.

About 73 percent of S&P 500 companies that reported second- quarter earnings so far topped analysts' estimates, according to data compiled by Bloomberg. Excluding financials, profit at companies in the measure is forecast to grow by 5.4 percent in the period, Bloomberg data shows.

Europe Advances

European stocks rose for the first time in four days after Societe Generale SA and Air France-KLM Group reported better- than-estimated earnings, stoking speculation profit growth will withstand the economic slowdown. Asian shares fell.

Procter & Gamble added 18 cents to $66 after the company reported earnings excluding some items of 80 cents a share, more than the 78 cents estimated by analysts.

AIG jumped 91 cents to $27.60. UBS analyst Andrew Kligerman said the insurer's valuation ``more than reflects ultimate economic loss exposure.'' AIG is forecast to report second- quarter earnings of 79 cents a share, according to the average analyst estimate compiled by Bloomberg. The shares are trading at less than 14 times projected earnings, 42 percent below the company's average valuation versus reported earnings over the last decade.

Fed Watch

All 69 economists surveyed by Bloomberg News expect the Fed's Open Market Committee to leave its benchmark rate on hold at 2 percent. Futures traders are pricing in 93 percent odds of no change in the Federal funds target rate. The announcement is due at 2:15 p.m. in Washington.

``I think the Fed is on hold until you get into February of next year when the new governors are seated and then I would expect them to raise interest rates,'' Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a Bloomberg Television interview.

Oil dropped to the lowest in three months in New York on speculation Tropical Storm Edouard isn't strong enough to damage offshore production facilities in the U.S. Gulf.

General Motors added 30 cents to $10.40.

Bear Market

Energy companies in the S&P 500 fell into a bear market yesterday, bringing their decline from a May record to more than 20 percent as crude prices tumbled.

Apple Inc. rose $1.96 to $155.19. UBS AG initiated coverage of the maker of the iPod music player with a ``buy'' rating and predicted the shares will rise to $195. New products to be introduced in the next 12 months are likely to boost profits, UBS said.

News Corp. and Cisco Systems Inc. are also among companies scheduled to report results today.

Sirius XM Radio Inc. rose 8 cents to $1.47. Chief Executive Officer Mel Karmazin bought 2 million shares of the satellite broadcaster, bringing his stake to more than 8.5 million shares.

Masimo Corp. climbed $2.70 to $39.94. The maker of medical devices reported second-quarter profit of 18 cents a share, beating the 13-cent average analyst estimate in a Bloomberg survey.

Syniverse Holdings Inc. soared $1.60 to $18.01 in trading after the official close of U.S. exchanges. The provider of technology services to mobile-phone companies said revenue may be as much as $495 million this year. Analysts polled by Bloomberg estimated $464.8 million. The shares didn't trade in Europe.

A report by the Institute for Supply Management today may show service industries in the U.S. shrank in July for a second straight month, signaling the steeper slowdown in growth, according to economists in a survey.

To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Elizabeth Stanton in New York at estanton@bloomberg.net