mini dow futures

Dow Jones Futures Rise

August 7th, 2012

Dow Jones Futures – U.S. stock futures advanced, indicating the Standard & Poor’s 500 Index will rally for a third day, amid better-than-estimated corporate earnings and speculation global central banks will act to boost growth.

CVS Caremark Corp. (CVS), the largest provider of prescription drugs in the U.S., climbed 2.7 percent as profit beat analysts’ projections. Chesapeake (CHK) Energy Corp., the second-largest U.S. natural-gas producer, increased 5.3 percent after reporting the highest quarterly profit in the company’s history. Sirius (SIRI) XM Radio Inc., the largest U.S. satellite-radio company, gained 2.3 percent after boosting its annual profit forecast.

S&P 500 futures expiring in September rose 0.4 percent to 1,395.7 at 9:15 p.m. in New York. Dow Jones Industrial Average futures added 36 points, or 0.3 percent, to 13,103 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.

“The fear of things collapsing is going away,” said Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York. “The recession, which everyone was concerned about a month ago, is not going to happen. There’s a perception that the ECB is willing to buy bonds if needed. As long the concern dissipated, you’re going to see this market wanting to go up.”

Equities rose as 73 percent of the S&P 500 companies which reported second-quarter results beat earnings estimates, according to data compiled by Bloomberg. Federal Reserve Bank of Boston President Eric Rosengren said the central bank should pursue an “open-ended” easing program of “substantial magnitude.” German Chancellor Angela Merkel backed a bond- buying plan announced last week by the European Central Bank, a spokesman said yesterday.

CVS’s Results

CVS added 2.7 percent to $46.10. The company boosted revenue 16 percent after winning customers from Walgreen Co. (WAG), 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.

Chesapeake rose 5.3 percent to $18.64. 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 2.3 percent to $2.25. 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.

Higher Forecast

Fossil Inc. (FOSL) added 20 percent to $83.79. The maker of jewelry and leather goods raised its profit forecast on increasing sales of its Skagen brand.

Some of the largest health-care companies tumbled. Pfizer (PFE) Inc., Johnson & Johnson (JNJ) and Elan Corp. ended most plans to develop an Alzheimer’s drug after a second trial failure, a blow to the companies’ efforts to market the first product to slow progress of the disease.

Until the bapineuzumab trials were stopped, Pfizer, Elan and J&J were competing with Indianapolis-based Eli Lilly (LLY) & Co. to create the first therapy to target a cause for Alzheimer’s, rather than just its symptoms. Trial results for the Lilly therapy, solanezumab, are due soon.

Pfizer lost 1.6 percent to $23.87. Johnson & Johnson dropped 0.6 percent to $68.40. Lilly sank 1.6 percent to $43.

Regional Banks

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.

The KBW Regional Bank Index has lagged behind the S&P 500 (SPX) 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. (WFC) 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.

- Rita Nazareth in New York at Bloomberg.