Bloomberg News

U.S. Stock Futures Rise on Better-Than-Estimated Earnings

August 07, 2012

U.S. stock futures advanced, indicating the Standard & Poor’s 500 Index will rally for a third day, amid better-than-estimated corporate earnings.

CVS Caremark Corp. (CVS:US), the largest provider of prescription drugs in the U.S., climbed 2.2 percent as profit beat analysts’ projections. Chesapeake (CHK:US) Energy Corp., the second-largest U.S. natural-gas producer, increased 5.1 percent after reporting the highest quarterly profit (CHK:US) in the company’s history. Sirius (SIRI:US) XM Radio Inc., the largest U.S. satellite-radio company, gained 3.2 percent after boosting its annual profit forecast (SIRI:US).

S&P 500 futures expiring in September rose 0.4 percent to 1,395.2 at 8:17 p.m. in New York. Dow Jones Industrial Average futures added 33 points, or 0.3 percent, to 13,100 today. The number of shares changing hands in Stoxx Europe 600 Index’s companies was 11 percent lower than the 30-day average at this time of day, according to data compiled by Bloomberg.

Equities rose as 72 percent of the S&P 500 (SPX) companies which reported second-quarter results beat analysts’ earnings estimates, according to data compiled by Bloomberg.

CVS added 2.2 percent to $45.88. The company boosted revenue 16 percent after winning customers from Walgreen Co. (WAG:US), which last year ended its contract to sell prescriptions through employee benefits manager Express Scripts Holding Co. CVS reiterated today it expects to retain at least half of those customers in the fourth quarter as Walgreen and Express Scripts prepare to renew their agreement, effective Sept. 15.

Asset Sales

Chesapeake rose 5.1 percent to $18.61. The company increased the minimum it plans to raise through asset sales this year to $13 billion from $11.5 billion, and said more than half of that will come by the end of next month when it completes sales of Texas oifields. It lifted its full-year production estimate thanks to discoveries in Texas and Ohio, and said the danger of outspending cash flow next year has abated.

Sirius increased 3.2 percent to $2.27. The company added 622,000 subscribers last quarter, bringing its total to a record 22.9 million. As Sirius grows, it faces a challenge for control of the company. John Malone’s Liberty Media Corp. is trying to take over Sirius -- an effort that has contributed to a 21 percent gain in the stock price this year.

Regional banks have become a more telling indicator of the U.S. stock market’s prospects than the country’s largest lenders, according to Donald Coxe, a strategy adviser to Bank of Montreal’s securities unit.

Lagging Behind

The KBW Regional Bank Index has lagged behind the S&P 500 most of the time since March 2009, when the latter gauge started rising from a 12-year low. The index of 50 lenders has also failed to keep pace since the first week of June, when stocks began their current rally.

This performance contrasts with the KBW Bank Index (BKX), consisting of Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Wells Fargo & Co. and 20 more of the biggest U.S. banks. The gauge, included in the chart, has gained more than the S&P 500 since March 2009 and in the past two months.

“The tide is turning away from those mega-institutions,” Coxe wrote in an Aug. 3 report. The shift results from “badly behaved bankers” who relied on the government for help during the 2008 financial crisis and fought efforts to rein in their business afterward, the report said.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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Companies Mentioned

  • CVS
    (CVS Caremark Corp)
    • $79.24 USD
    • 0.26
    • 0.33%
  • CHK
    (Chesapeake Energy Corp)
    • $26.02 USD
    • -0.44
    • -1.69%
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