By Daniela Silberstein and Elizabeth Stanton
Jan. 27 (Bloomberg) -- U.S. stock-index futures fluctuated as a disappointing profit forecast at Caterpillar Inc. offset higher-than-estimated sales at Yahoo! Inc.
Caterpillar, the largest maker of bulldozers and excavators, declined 4.4 percent after projecting 2010 profits that fell short of the average analyst estimate. Yahoo, owner of the second-most-used Internet search engine in the U.S., advanced after online advertising revenue exceeded projections. Berkshire Hathaway Inc.’s Class B stock soared 8.3 percent after being picked to join the Standard & Poor’s 500 Index.
Futures on the S&P 500 expiring in March rose 0.1 percent to 1,088.4 as of 8:47 a.m. in New York. Dow Jones Industrial Average futures fell 4 points, or less than 0.1 percent, to 10,134 and Nasdaq-100 Index futures added 0.2 percent to 1,799.5. Stocks in Europe and Asia fell.
“If we have good economic data and good earnings reports the market will gain a foothold again,” said Peter Braendle, who helps oversee about $50 billion at Swisscanto Asset Management in Zurich. “I can imagine that we can come back up as fast as we fell. I’m surprised that we saw such a setback at the beginning of the year already.”
Tumble From Peak
After closing at a 15-month high on Jan. 19, the S&P 500 slumped 5.1 percent in its biggest three-day drop in 10 months as President Barack Obama called for limits on risk- taking by banks and China moved to restrict lending and cool economic growth. The move erased the index’s gain for the year. Valued at more than 18 times forecast earnings at the start of the year, the benchmark now trades at 14.2 times projected profit.
Stocks fell yesterday as investors speculated the Federal Reserve policy makers, concluding a two-day meeting in Washington today, may signal more plans to unwind stimulus measures and as Elliott Wave International Chief Executive Officer Robert Prechter said a new bear market may have begun.
A record nine-quarter earnings slump for S&P 500 companies is projected to have ended in the fourth quarter with a 73 percent increase in profits. More than 130 companies in the index are scheduled to release results this week, including Procter & Gamble, 3M Co., Microsoft Corp. and Amazon.com Inc.
Earnings Season
About three-quarters of the companies that have reported fourth-quarter results have beaten analyst estimates for per-share earnings, according to Bloomberg data.
The Fed Open Market Committee, gathering while Chairman Ben S. Bernanke awaits a Senate vote on whether to confirm him for a second term, is expected to keep the benchmark for short-term interest rates in the zero to 0.25 percent range, where it’s been since December 2008. Investors’ focus has been on how and when the central bank will signal its intention to start raising rates, and to dismantle the programs by which it has financed risky assets for the banking system.
The Fed may also take a chance the housing market can stage a comeback without its support by announcing today it will stick to the plan to end a $1.25 trillion program of mortgage-debt purchases in March. The statement is scheduled to be released at around 2:15 p.m.
Housing Market
Americans probably bought more new homes in December, signaling a government tax credit will prevent the industry from backsliding, economists expect a government report today to show. Purchases rose 3 percent to an annual pace of 366,000, according to the median estimate of 70 economists surveyed by Bloomberg News. The figures are due at 10 a.m. Washington time.
Caterpillar fell 4.4 percent to $53.40 in pre-market New York trading. The company forecast 2010 profit of about $2.50 a share. Analysts, on average, estimated per-share earnings of $2.70.
Yahoo advanced 3.2 percent to $16.50. Excluding revenue passed on to partner sites, sales were $1.26 billion, beating the average estimate of $1.23 billion in a Bloomberg survey of analysts. The company’s total sales fell 4.1 percent to $1.73 billion, yet still edged out its own forecast of $1.6 billion to $1.7 billion.
Berkshire Hathaway Class B shares soared 8.3 percent to $73.61 in early trading. The company was picked to join the S&P 500, the benchmark index for U.S. stocks that investors with about $1 trillion in assets mimic. The firm will replace Burlington Northern Santa Fe Corp. after completing the takeover of the railroad, S&P said yesterday.
BlackRock
BlackRock Inc., the world’s largest money manager, said fourth-quarter net income rose as last month’s purchase of Barclays Global Investors lifted fee revenue and investors poured $82 billion into funds. Adjusted net income, including certain one-time items, was $2.39 a share. Eleven analysts surveyed by Bloomberg on average expected BlackRock to earn $2.08 a share. The stock added 2.1 percent to $229.32 in Germany.
U.S. Steel Corp. dropped 1 percent to $49.10. The second-largest U.S.-based steelmaker was downgraded to “neutral” from “buy” at Goldman Sachs Group Inc. after the company reported a wider-than-estimated quarterly loss yesterday.
To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net. Elizabeth Stanton in New York at estanton@bloomberg.net
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