U.S. Stock Futures Slightly Higher Ahead Of Fed Meeting

Date : 06/19/2012 @ 7:50AM
Source : Dow Jones News
Stock : Fedex Corp. (FDX)
Quote : 225.07  1.1 (0.49%) @ 3:59PM

U.S. Stock Futures Slightly Higher Ahead Of Fed Meeting

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U.S. stock-market futures traded slightly higher Tuesday ahead of the start of a two-day Federal Reserve meeting, while European stocks largely rose as pressure eased a bit on Spanish bonds.

Futures for the Dow Jones Industrial Average rose 19 points to 12705, while those for the Standard & Poor's 500 index rose 2.5 points, or 0.2%, to 1343.50. Futures for the Nasdaq Composite index rose 9.75 points to 2597.25.

Many observers believe the Fed will likely extend its $400 billion Operation Twist program at the end of the two-day Federal Open Market Committee meeting that begins Tuesday. Under the twist program, the Fed sells short-term securities while buying longer-term securities in order to keep long-term interest rates low.

"However, there is also a view that an extension to Operation Twist would be a disappointment, and won't be enough to boost risk assets appreciably," said David Morrison, senior market strategist at GFT Markets. He said investors may be looking for a fresh program of asset buys.

"As expectations tick higher, there is an increased danger that investors end up disappointed--particularly if the Fed decides to hold back from any form of further intervention," said Morrison, in emailed comments.

On the data calendar for Tuesday, housing starts for May will be released at 8:30 a.m. EDT.

Investors will also be following the Group of 20 meeting in Los Cabos, Mexico. Several major emerging-market countries on Monday detailed their plans to lift the International Monetary Fund's bailout fund.

On Monday, the Dow Jones Industrial Average finished 25.35 points, or 0.2%, lower, at 12741.82, while the S&P 500 index rose 1.94 points, or 0.1%, to 1344.78 as relief over Greece's elections was replaced with concern over rising bond yields in Spain.

The yield on Spain's 10-year government bond eased 8 basis points to 7.04% on Tuesday after surging above the psychologically important 7% level the prior day amid mounting worries that the country could need a full-scale bailout, not just a bank-stabilization intervention. The market was helped in part by an auction of 12- and 18-month treasury bills, in which the government paid a higher yield but sold more than was expected.

The Spanish IBEX 35 index jumped 1.5%, leading gains across Europe. On the downside, shares of Danone SA (BN.FR, DANOY) sank 7% after the French food group lowered targets for 2012 after demand for its products in southern Europe fell more than anticipated. The Stoxx Europe 600 index rose 0.4% to 245.36.

Asia stocks retreated Tuesday in a delayed reaction to the worries about Spain that weighed on other markets Monday.

The euro regained some ground in Asia and Europe, rising to $1.2605 from $1.2572 against the prior day.

Gold for August delivery rose $4.70 to $1,631.60 an ounce, while oil for July delivery slipped 25 cents to $83.02 a barrel.

Within corporate news, FedEx Corp. (FDX) will be in focus with its fourth-quarter results due for release ahead of the bell.

J.C. Penney Co. Inc. (JCP) could also be active. Shares of the retailer dropped in late trades Monday on news that President Michael Francis would exit the company after just eight months at his post.

-Write Barbara Kollmeyer at barbara.kollmeyer@dowjones.com


Among the companies with shares expected to actively trade in Tuesday's session are Oracle Corp. (ORCL), J.C. Penney Co. (JCP) and IHS Inc. (IHS).

Oracle reported its fourth-quarter profit increased 7.5%, a surprise announcement three days ahead of schedule that appeared to be triggered by the departure of a top sales executive. Oracle shares were up 3.5% to $28.08 after hours.

J.C. Penney said its president, Michael R. Francis, is leaving the company, effective Monday, after eight months at the retailer. Shares slipped 5.5% to $23 after hours.

IHS's fiscal second-quarter earnings rose 11% as the market-research firm saw subscription revenue boost results. Shares sank 3.9% to $101.75 after hours, as the company disclosed that selling stockholders plan to sell 8 million shares of IHS stock.

A U.S. district court sided with video-ringtone company Vringo Inc. (VRNG) regarding four out of six issues in an ongoing patent case it has against a handful of major companies. Shares jumped 12% to $4.49 after hours.

HCP Inc. (HCP), a real-estate investment trust focused on health-care facilities, said it agreed to sell 7.8 million shares to Citigroup Inc. (C), using the proceeds to repay debt and for general corporate needs. Shares were off 3.3% to $42.19 after hours.

Pebblebrook Hotel Trust (PEB) said it will offer 4.5 million shares of its stock, looking to use the proceeds for general corporate needs, which may include acquiring and investing in hotel properties. Shares slipped 2.4% to $22.04 after hours.

Western Gas Partners LP (WES), which transports and gathers natural gas for its parent Anadarko Petroleum Corp. (APC), said it will offer 5 million of its units, using the funds raised for general corporate needs. Shares slid 3.6% to $43.79 after hours.


DCP Midstream Partners LP (DPM) has agreed to acquire a processing plant and gathering system from Penn Virginia Resource Partners LP (PVR) for approximately $63 million, as DCP Midstream looks to increase its market position in East Texas.

Hancock Holding Co. (HBHC) said it started a cash tender offer for up to $75 million of its 5.875% subordinated notes due 2017, as the lender sought to lighten its borrowing burden.

KKR & Co. L.P. (KKR) has expanded into the fund-of-hedge-funds business by acquiring Prisma Capital Partners LP, which managed $7.8 billion of assets as of April 1.

Marriott International Inc. (MAR) said it is on track to have 4,000 hotels in 90 countries by 2014, including 100 hotels expected in China.

Microsoft Corp. (MSFT) on Monday unveiled the first tablet computer it has ever made, a sign of the new tactics the company is taking as it tries to make up lost ground in the markets for tablets and smartphones.

Pep Boys-Manny Moe & Jack (PBY) said its chief financial officer, Ray Arthur, is resigning to pursue another business opportunity and said it will conduct a national search for his replacement.

The U.S. Food and Drug Administration refused to approve a Pfizer Inc. (PFE) experimental drug to treat a rare genetic disorder that affects the nervous system, requesting the completion of a second study involving the drug.

Standard & Poor's Ratings Services raised its outlook on Ross Stores Inc. (ROST) to positive from stable, as it expects the discount retailer to maintain its positive sales momentum.

-Write to Nathalie Tadena at nathalie.tadena@dowjones.com

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