By Rita Nazareth - Feb 21, 2012 8:19 PM GMT+0700
U.S. stock-index futures advanced, paring earlier gains, on concern that Greece’s debt crisis will persist even after a second international bailout.
Home Depot Inc. (HD), the largest home-improvement retailer, climbed 3.5 percent as profit beat analysts’ estimates. Wynn Resorts Ltd. (WYNN) rallied 5.7 percent after buying out its largest shareholder’s stake at a 31 percent discount and asking him to quit the board after a bribery probe. Wal-Mart Stores Inc. (WMT), the biggest retailer, fell 2.5 percent as low prices hurt margins.
Standard & Poor’s 500 Index futures expiring in March added 0.1 percent to 1,361.10 at 8:17 a.m. in New York, paring an advance of as much as 0.7 percent. Dow Jones Industrial Average futures rose 30 points, or 0.2 percent, to 12,959. The U.S. stock market was closed yesterday for a holiday.
“We saw strong gains last week as the bailout was anticipated,” said Louis de Fels, a Paris-based money manager at Raymond James Asset Management International, which oversees $35 billion worldwide. “Now we will need more good economic news to push stocks higher. We could have a short-term correction, but we’re confident about U.S. stocks for the year.”
The S&P 500 advanced 1.4 percent last week, putting it 0.2 percent away from erasing its losses since its 2011 high in April, amid optimism policy makers would save Greece from default and reports on U.S. manufacturing, housing and jobless claims that bolstered confidence.
Greece Bailout
European finance ministers approved 130 billion euros ($173 billion) in aid for Greece by tapping into European Central Bank profits and coaxing investors into providing more debt relief to shield the region from a default. Greece’s debt may still balloon to 160 percent of gross domestic product in a worst-case scenario, analysis by the International Monetary Fund and European officials indicated.
Home Depot gained 3.5 percent to $48.35. The company attracted customers who spent more as U.S. unemployment sank to a three-year low in January and builders began work on more houses. Warmer weather helped sales at stores open at least a year advance 5.7 percent, the biggest gain since a 7.7 percent increase in the first quarter of 2004. That topped the average estimate for a 3 percent gain by five analysts.
Wynn Resorts added 5.7 percent to $119.10. Former Nevada Governor Robert Miller and Louis Freeh, the ex-director of the Federal Bureau of Investigation, investigated claims that Kazuo Okada violated U.S. anti-corruption laws and uncovered cash payments and gifts valued at about $110,000 to gambling regulators.
Wal-Mart
Wal-Mart Stores lost 2.5 percent to $60.90. Chief Executive Officer Mike Duke is working to contain Wal-Mart’s costs and last quarter started pulling the company’s greeters from store lobbies to help with customer-service tasks. The retailer is seeking to keep prices low as its low-income shoppers suffer from persistent unemployment.
The S&P 500 is approaching the cheapest level ever compared with bonds as Federal Reserve Chairman Ben S. Bernanke’s zero- percent interest rates drive investors and companies from cash.
Profits that doubled since 2009 pushed the index’s so- called earnings yield to 7.1 percent, close to the highest on record when compared with the 10-year Treasury rate, according to data compiled by Bloomberg since 1962. American companies have boosted capital spending 35 percent over six quarters, the most since 2006.
“Conditions are almost ideal for equity investors relative to all other investments,” Keith Wirtz, who oversees $14.6 billion as chief investment officer for Fifth Third Asset Management in Cincinnati, said in a Feb. 14 telephone interview. “The Fed’s keeping rates low for the foreseeable future to try to stimulate the environment for employee hiring and business activity. What does that mean for capital markets? Savers are not being rewarded.”
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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