By Adam Haigh
Sept. 23 (Bloomberg) -- U.S. stock-index futures gained, indicating the Standard & Poor’s 500 Index may extend an 11- month high, after a sales forecast from Seagate Technology added to signs the global economy is recovering.
Seagate, the largest maker of hard-disk drives, climbed 2.7 percent after saying sales might top its projection as demand improves. BlackRock Inc., the biggest money manager, rose 1.4 percent after Deutsche Bank AG recommended buying the shares.
Futures on the S&P 500 index expiring in December increased 0.2 percent to 1,069.70 as of 7:31 a.m. in New York. Dow Jones Industrial Average futures added 0.1 percent to 9,783. Nasdaq- 100 Index futures gained 0.3 percent to 1,739.
Equities have surged since March as the Group of 20 committed about $12 trillion to revive economic growth and the Federal Reserve kept overnight borrowing costs near zero to unlock credit markets.
“Governments have provided so much liquidity and money through quantitative easing and that money has to go somewhere so you’re getting a recovery in stock markets and other assets,” said Robin Griffiths, chief technical strategist at Cazenove Capital Management in London. “We are coming up to a period where at least a short-term correction would be likely,” he told Bloomberg Television. A correction would amount to a 10 percent to 15 percent decline in equities, he said.
The 58 percent rally in the S&P 500 since March 9 has left the gauge trading at about 20.2 times its companies’ reported profits, the highest level since 2004, according to data compiled by Bloomberg.
Federal Reserve
Fed officials may signal today that the economy has started to recover while maintaining their pledge to keep the benchmark interest rate near a record low for an “extended period.” Officials will probably debate their purchases of $1.45 trillion in housing debt, including whether to extend the emergency program into 2010, analysts said.
The Federal Open Market Committee is scheduled to issue its statement at around 2:15 p.m. Washington time after the end of its two-day meeting.
G-20 leaders will meet in Pittsburgh for two days starting tomorrow to work on an accord to prevent a repeat of the worst financial crisis since the Great Depression and ensure a sustained recovery. International Monetary Fund Managing Director Dominique Strauss-Kahn called on the G-20 to maintain efforts to pull the world economy out of its first recession since World War II, warning that the crisis isn’t over.
Seagate, BlackRock
Seagate added 2.7 percent to $16.10 in pre-market New York trading after saying revenue will “be at or slightly” above the high end of its July forecast of $2.4 billion to $2.6 billion in the first fiscal quarter ending Oct. 3.
Industrywide orders for hard drives should top an earlier forecast of 135 million to 140 million units, the company also said. Deutsche Bank raised the shares to “buy” from “hold.”
BlackRock gained 1.4 percent to $211.08 in Germany after Deutsche Bank lifted its recommendation on the stock to “buy” from “hold.”
Schlumberger Ltd., the largest oilfield-services provider, slipped 0.6 percent to $61.18 in France. Crude declined as much as 1 percent in New York before a report that’s forecast to show U.S. inventories of heating oil and other distillate fuels rose from their highest in 26 years.
Prudential Financial Inc. and Unum Group will probably move after Morgan Stanley lowered the shares to “equal weight” from “overweight” and to “underweight” from “equal weight,” respectively.
Wall Street Strategists
Morgan Stanley cut its recommendation on the U.S. life insurance industry to “in line” from “attractive,” saying further advances are “looking limited” after recent gains. Shares of Prudential Financial and Unum didn’t trade in Europe.
Strategists at Wall Street’s biggest securities firms can’t keep up with the S&P 500 after the steepest surge since the 1930s. The benchmark gauge for U.S. equities climbed 0.7 percent yesterday to 1,071.66, leaving it above all but one of the 10 projections by forecasters in a Bloomberg survey this month, the first time that’s happened in data going back to 1999. The average forecast for the S&P 500 from the strategists is 1,022, about 5 percent below the index’s current level.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
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