By Nikolaj Gammeltoft - Jan 6, 2012 8:50 PM GMT+0700
U.S. stock futures rose, indicating the Standard & Poor’s 500 Index will extend its weekly gain, as better-than-forecast jobs growth and a drop in the unemployment rate bolstered optimism in the world’s largest economy.
General Electric Co. (GE) and Caterpillar Inc. (CAT) climbed at least 0.8 percent, pacing gains among the largest companies. Schlumberger Ltd. (SLB) and ConocoPhillips (COP) gained more than 0.6 percent. Alcoa Inc. (AA), which is due to start the earnings season on Jan. 9, slipped 2.4 percent after saying it will close 12 percent of its global smelting capacity.
S&P 500 futures (SPH2) expiring in March gained 0.4 percent to 1,278.7 at 8:45 a.m. in New York. The benchmark measure has climbed 1.9 percent so far this week. Dow Jones Industrial Average futures expiring the same month added 52 points, or 0.4 percent, to 12,383.
“The jobs numbers are unambiguously good,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion, said in a telephone interview. “Equities should react positively to this,” he said. “We’re seeing a sequential improvement in the U.S. economy.”
Equity futures extended gains as U.S. employers added more workers to payrolls than forecast in December. The 200,000 increase followed a revised 100,000 gain in November that was smaller than initially estimated, Labor Department figures showed in Washington. The median projection in a Bloomberg News survey called for a December gain of 155,000. The unemployment rate unexpectedly fell to 8.5 percent, the lowest since February 2009, while hours worked and earnings climbed.
Profit Forecasts
Most U.S. stocks rose yesterday as banks rallied and payrolls climbed, offsetting reduced profit forecasts at companies including Target Corp. and J.C. Penney Co.
Alcoa (SPX) is scheduled to mark the unofficial start of the fourth-quarter earnings season on Jan. 9. Profit at S&P 500 companies rose 6.2 percent during the September-December period (SPX), according to analyst estimates compiled by Bloomberg, which would mark the slowest growth since the third quarter of 2009.
U.S. stock mutual funds that invest in domestic equities had their second-worst redemptions last year as record market swings sent investors to the perceived safety of bond funds.
Investors pulled an estimated $132 billion from mutual funds that invest in U.S. stocks, the fifth straight year of withdrawals for domestic funds, according to preliminary data from the Investment Company Institute, a Washington-based trade group whose numbers go back to 1984.
To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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