U.S. Stock-Index Futures Fluctuate; MBIA Gains as Cisco Drops

By Adam Haigh

Aug. 6 (Bloomberg) -- U.S. stock-index futures drifted between gains and losses before a government report on weekly jobless claims.

MBIA Inc. rallied 16 percent in German trading after the world’s largest bond insurer by total guarantees posted a second-quarter profit of $894.7 million. Cisco Systems Inc. sank 3.5 percent as the biggest maker of networking equipment predicted that revenue will drop as the recession crimps orders.

Futures on the Standard & Poor’s 500 Index expiring in September was unchanged at 1,000.80 as of 9:50 a.m. in London. Dow Jones Industrial Average futures gained 0.1 percent to 9,253. Nasdaq-100 Index futures fell 0.2 percent to 1,611.

“We’re definitely coming out of recession but the recovery will be pretty muted,” Alan Brown, chief investment officer at Schroders Plc in London, told Bloomberg Television. “The real challenges are going to come next year when we see if this economy can really develop momentum of its own.”

The S&P 500 yesterday fell from a nine-month high after reports on job losses and service industries were worse than economists estimated. Since reaching a 12-year low of 676.53 on March 9, the S&P 500 has rebounded 48 percent, the steepest rally over the same number of days since the Great Depression.

Investors should raise holdings in U.S. energy stocks because the global economy is in “a full recovery,” according to JPMorgan Chase & Co. strategist Thomas Lee. He upgraded the sector to “overweight” from “neutral” while advising investors to shift money out of health-care stocks, cutting the group to “underweight” from “neutral.”

Jobless Claims

Americans filing for jobless claims fell to 580,000 for the week through Aug. 1 from 584,000 in the previous week, according to estimates compiled by Bloomberg. The Labor Department report is due at 8:30 a.m. New York time.

MBIA added 16 percent to $6.41. Second-quarter profit, equivalent to $4.30 a share, compared with net income of $1.7 billion, or $7.14, a year earlier.

Cisco retreated 3.5 percent to $21.39 in German trading after saying revenue will fall 15 percent to 17 percent in the fiscal first quarter, which ends in October. That equates to between about $8.6 billion and $8.8 billion, down from $10.4 billion a year earlier.

Companies in the S&P 500 are headed for a record eighth consecutive drop in quarterly profits. Per-share earnings have tumbled 31 percent on average, matching analysts’ estimates compiled by Bloomberg. Analysts predict a 22 percent third- quarter decline before a 62 percent rebound in earnings in the final three months of the year.

While profits are falling, results have surpassed projections by an average of 10 percent in the current season. Per-share earnings have beaten estimates at three-quarters of the 421 companies in the S&P 500 that released second-quarter results since June 17, according to data compiled by Bloomberg.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.