Stephen Pope Comments: U.S. Stock Futures Rise As UPS, AT&T, Qualcomm Lift Forecasts
July 22, 2010, Bloomberg BusinessWeek
U.S. stock-index futures rose, signaling the Standard & Poor’s 500 Index may recoup yesterday’s loss, after companies from United Parcel Service Inc. to AT&T Inc. and Qualcomm Inc. increased profit forecasts.
UPS jumped 4.2 percent as growing overseas demand and cost- cutting efforts improved the earnings outlook at the world’s largest package-delivery company. AT&T rose 1.4 percent as quarterly profit beat analysts’ estimates on demand for Apple Inc.’s iPhone. Qualcomm, the biggest maker of chips that run mobile phones, jumped 4.5 percent as it predicted higher selling prices for devices based on its technology.
Futures on the S&P 500 expiring in September rose 1.3 percent to 1,078 at 9:09 a.m. in New York after the benchmark index for U.S. equities dropped 1.3 percent yesterday. Dow Jones Industrial Average futures climbed 1.1 percent to 10,169 and Nasdaq-100 Index futures rallied 1.2 percent to 1,836.5.
“Investors look to UPS as an indicator for the global economy, so their strong numbers are a positive,” said Greg Woodard, portfolio strategist at Manning & Napier in Fairport, New York, which manages about $30 billion. “Some of the negative sentiment that had crept into the market is disappearing.”
Bernanke’s Outlook
U.S. stocks snapped two days of gains yesterday as Federal Reserve Chairman Ben S. Bernanke said the economic outlook remains “unusually uncertain” without offering additional measures to stimulate growth. His semiannual testimony concludes today with a 9:30 a.m. hearing before the House Financial Services Committee in Washington.
The S&P 500 has climbed 4.6 percent since July 2 on optimism about corporate earnings. About 85 percent of S&P 500 companies that have reported results since July 12 beat analysts’ per-share earnings forecasts, Bloomberg data show.
“Corporate America is in very good shape,” said London- based Stephen Pope, chief global equity strategist at Cantor Fitzgerald. “We are seeing companies coming through with good top-line growth. I am happy with the tone and tenor of the U.S. equity market.”
UPS Rallies
UPS jumped 4.2 percent to $62.50 after raising its annual profit forecast and posting second-quarter earnings that beat analysts’ estimates. Net income was $845 million, or 84 cents a share, which exceeded the 75-cent average of 10 analysts’ estimates compiled by Bloomberg. Revenue rose 13 percent to $12.2 billion, UPS said.
AT&T increased 1.4 percent to $25.28. The largest U.S. phone company also reported second-quarter profit that beat analysts’ estimates. AT&T, which gets more than 40 percent of its sales from its wireless unit, activated 3.2 million iPhones in the period and gained a net 496,000 contract subscribers.
Qualcomm rallied 4.5 percent to $37.80 in early trading in New York after the chipmaker said it expects higher profit and selling prices for devices based on its technology. The company raised its 2010 profit forecast and reported third-quarter sales that topped some analysts’ estimates, a sign that demand for phones is picking up.
EBay Rallies
EBay climbed 4.3 percent to $21.03 in pre-market trading after the company reported a 26 percent rise in second-quarter profit to $412.2 million, or 31 cents a share, after the close of trading in New York yesterday. Excluding some costs, earnings were 40 cents a share, topping the average analyst estimate of 38 cents, according to a Bloomberg survey.
Xerox Corp. climbed 5.8 percent to $8.90. The largest maker of high-speed color printers posted second-quarter profit that topped analysts’ estimates and boosted its full-year forecast on increasing revenue and cost cuts. The company said 2010 earnings excluding some items would be at least 88 cents a share, compared with the 87-cent average estimate of analyst surveyed by Bloomberg.
AmeriCredit Corp. surged 23 percent to $24.15 in early New York trading after General Motors Co. said it’s purchasing the sub-prime lender for $24.50 a share.
