U.S. Stock-Index Futures Rise After Housing Data; Pulte Gains

By Elizabeth Stanton
Enlarge Image/Details

Aug. 26 (Bloomberg) -- U.S. stock-index futures rose, erasing an earlier retreat, after a private report signaled the housing slump may be starting to stabilize.

Pulte Homes Inc. climbed 1.8 percent and Citigroup Inc. advanced 0.5 percent after the S&P/Case-Shiller index decreased less than economists forecast. Barrick Gold Corp. lost 1.8 percent and Freeport-McMoRan Copper & Gold Inc. retreated almost 1 percent as gold declined for a third day and copper fell in London.

Standard & Poor's 500 Index futures expiring in September added 0.1 point to 1,266.5 as of 9:24 a.m. in New York. Dow Jones Industrial Average futures increased 6 to 11,390 and Nasdaq-100 Index futures lost 1.75 to 1,893.25.

The S&P 500 Index is down 14 percent this year on concern more than $500 billion in losses and writedowns related to the collapse of the subprime-mortgage market and accelerating inflation will slow economic expansion and curb profit growth.

Purchases of new houses in the U.S. probably dropped 0.9 percent to a 525,000 annual pace, according to the median forecast in a Bloomberg News survey. Sales reached a 17-year low rate of 513,000 in March. The report from the Commerce Department is due at 10 a.m. in Washington today.

At 10 a.m., a report from the New York-based Conference Board may show confidence this month was little-changed from a 16-year low reached in June, according to the survey.

Barrick

Barrick, the world's largest gold producer, retreated 61 cents to $33.80. Freeport, the biggest publicly traded copper producer, fell 81 cents to $87.

Gold for immediate delivery lost $13.95, or 1.7 percent, to $808 an ounce in London as the dollar strengthened, diminishing demand for the metal as an alternative investment. Copper slid $125 to $7,535 a ton as inventories monitored by the London Metal Exchange jumped 17 percent this month.

American Eagle Outfitters retreated 4.3 percent to $13.15. The U.S. retailer of clothing for 15- to 25-year-olds said third- quarter profit will be as low as 31 cents a share, or 23 percent lower than the average analyst estimate in a Bloomberg survey.

Analysts forecast earnings among companies in the S&P 500 will decline 1.2 percent on average in 2008, according to weekly Bloomberg data. That compares with 15 percent growth forecast at the beginning of the year.

U.S. stocks dropped the most in a month yesterday as a Kansas bank's failure and speculation American International Group Inc. will post a loss heightened concern that credit writedowns will keep rattling the financial system.

Fannie Mae

Fannie Mae added 23 cents to $5.42 and Freddie Mac rose 20 cents to $3.49 in trading before the open of U.S. exchanges. U.S. Treasury Secretary Henry Paulson said providing government aid for the two largest U.S. mortgage-finance companies would be a last resort, the New York Times reported, citing an interview. A credit facility would be used as a last resort to protect the taxpayer, according to the newspaper, which said it interviewed Paulson on Aug. 18.

The S&P 500 is poised to retreat for a third straight month even after rebounding more than 4 percent from its low of the year on July 15. All 10 of the main industry groups in the index have declined this year, led by a 32 percent tumble in financial shares.

Morgan Stanley cut its year-end forecast for the S&P 500 by 7.1 percent to 1,300 yesterday on concern banks will report more credit-related writedowns and the global economic slowdown will curb profits at technology and industrial companies.

The average estimate of nine other Wall Street strategists who provide year-end forecasts to Bloomberg News is 1,446, implying a 14 percent rally from yesterday's close.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.