Market Hustle: Stock Futures Dip as Best Buy, Citigroup Retreat
Investors were focusing on earnings Thursday, scrutinizing fourth-quarter results from Citigroup (C) and Goldman Sachs (G)S, and Best Buy's (BBY) holiday same-store sales. Jobless claims and consumer price index reports did little to change expectations of a continuation of the Federal Reserve's plan to taper stimulus at a $10 billion monthly pace and a prolonged period of a Fed funds rate at record lows.
Futures for the S&P 500 were off 3.25 points, or 3.98 points below fair value, to 1,838.25, Dow Jones Industrial Average futures were falling 30 points, or 33.94 points below fair value, to 16,378, Nasdaq futures were down 1.5 points, or 5.89 points below fair value, to 3,596.8.
Best Buy was plunging 28.88% in premarket trading to $26.80 after reporting a U.S. holiday period same-store sales decline of 0.9% vs. expectations for an increase. Citigroup was giving up 3.16% to $53.17 after missing fourth-quarter estimates by a wide margin. Goldman Sachs was rising 0.56% to $179.75 after a mediocre fourth-quarter earnings beat. Intel (INTC) was down 0.07% to $26.65. The chipmaker is forecast to post fourth-quarter earnings of 52 cents a share on revenue of $13.72 billion after the closing bell.
S&P Capital IQ's chief equity strategist Sam Stovall said he thinks the S&P 500 will continue to power to new all-time highs, supported by economic reports. "Stocks remain attractive relative to bonds, in our view," he said.
- The basis-point spread between the trailing S&P 500 EPS yield and the 10-year Treasury remains more than one standard deviation above its mean during the past quarter century, according to Stovall.
- The S&P 500 has traditionally recorded above-average, year-ahead price increases whenever its dividend yield was less than one percentage point below the yield on the 10-year note, according to the S&P strategist.
- Initial jobless claims fell 2,000 to a lower-than-expected 326,000 for the week ended Jan. 11.
- The December consumer price index increased in line with forecasts by 1.5% year over year, with the core up 1.7%. Inflation numbers have been coming in below the Federal Reserve's long-term, 2% inflation target, encouraging views that the Federal funds rate could remain at near zero through 2015.
- The Philadelphia Fed's Business Outlook Survey for January and the National Association of Home Builders' housing market index for January will both be out at 10 a.m. EST
- Outgoing Federal Reserve Chairman Ben Bernanke will talk about challenges facing central banks, in Washington, at 11:10 a.m. San Francisco Federal Reserve Bank President John Williams speaks at 9:15 a.m.
- A spate of encouraging economic reports and an upbeat earnings announcement from financial heavyweight Bank of America (BAC) helped push the S&P 500 to a record closing high Wednesday.
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