By Adria Cimino
Sept. 29 (Bloomberg) -- U.S. stock-index futures were little changed as the highest valuations in five years helped offset speculation that economic reports today will show improvements in home prices and consumer confidence.
MBIA Inc. retreated 4.4 percent in Germany after Standard & Poor’s cut its credit ratings for the world’s biggest bond insurer by total guarantees. Coca-Cola Co., the largest soft- drinks maker, rose as Citigroup Inc. advised buying the shares.
Futures on the Standard & Poor’s 500 Index expiring in December lost 0.1 percent to 1,057.70 at 11:08 a.m. in London. Dow Jones Industrial Average futures slipped less than 0.1 percent to 9,724 and Nasdaq-100 Index futures decreased 0.4 percent to 1,716.25.
“All will depend on economic data,” said Clemence Bounaix, who helps oversee about $4.5 billion at KBL Richelieu Gestion in Paris. “There are industries that have strongly rebounded so we have to be cautious. We’re in a phase of recovery, but we’re not immune to a rough patch if there is any bad news.”
The S&P 500 has rallied 57 percent from a 12-year low in March, pushing valuations in the index to about 20 times the reported profits from continuing operations, data compiled by Bloomberg show. That’s the most expensive level since 2004.
Home values in 20 U.S. metropolitan areas probably declined at a slower pace and consumer confidence improved, signs the recession is abating as the real-estate crisis eases, economists said before reports today.
Economy Watch
The S&P/Case-Shiller home-price index fell 14.2 percent in July from a year earlier, the least in 17 months, according to the median forecast of 35 economists surveyed by Bloomberg News. The Conference Board may say its gauge of consumer sentiment rose this month to the highest level in a year. The home-price figures are due at 9 a.m. Washington time, while consumer confidence data is set for 10 a.m.
U.S. stocks rose yesterday, sending benchmark indexes up the most in five weeks, as takeovers in the drug and technology industries added to evidence that mergers and takeovers are rebounding from the slowest pace in six years.
Mergers and acquisitions involving U.S. companies have totaled $49.1 billion in September, compared with $26.6 billion in August and $36.8 billion in July, based on Bloomberg data.
Alcoa Inc. will be the first Dow company to release third- quarter earnings next week, scheduled for Oct. 7. Walgreen Co., Micron Technology Inc. and Constellation Brands Inc. are among the S&P 500 companies set to release results this week.
Credit Rating
MBIA lost 4.4 percent to $7.86 in Germany. The bond insurer had its credit ratings lowered to BB-, or three steps below investment grade, from BB by S&P, which cited continued losses related to the company’s structured finance products.
Coca-Cola was rated “buy” in new coverage at Citigroup, citing “markedly better” per-share earnings growth in 2010. The stock added 0.6 percent to $53.44 in Germany.
Dr Pepper Snapple Group Inc., the third-largest U.S. soda maker, was also rated “buy” at Citigroup, saying “carbonated soft drinks are a good place to be right now.” The stock didn’t trade in Europe.
Sequenom Inc. plunged 43 percent to $3.24 in early New York trading. The company dismissed its chief executive officer and a senior research executive after finding it mishandled development of a prenatal test for Down syndrome.
The steepest rally in the S&P 500 Index since the 1930s is restoring Byron Wien’s reputation as a stock picker. Wien, hired by Blackstone Group LP last month, said he’s keeping his January forecast for a 33 percent annual gain in the benchmark index, implying a 13 percent advance from yesterday’s close. More than six months ago, the S&P 500 needed to rise 77 percent to reach Wien’s year-end prediction of 1,200.
Wien’s year-end forecast for the S&P 500 is higher than the average estimate of strategists surveyed by Bloomberg of 1,037.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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