U.S. stock futures dropped, signaling the Standard & Poor’s 500 Index may post a fourth week of losses, after concern increased that the global economy is weakening.
S&P 500 futures expiring in September slumped 1 percent to 1,132.40 as of 1:36 p.m. in Hong Kong. Dow Jones Industrial Average futures fell 0.9 percent to 10,916. The MSCI Asia Pacific Index declined for a second day, losing 3.1 percent.
Bank of America Corp. shares may be active. Chief Executive Officer Brian T. Moynihan told his managers at the biggest U.S. lender to expect 3,500 job cuts this quarter. Aeropostale Inc. fell 9.1 percent in extended trading yesterday after the teen- clothing retailer forecast third-quarter profit that trailed analysts’ estimates.
“We have a fear-based, emotional-based market right now,” Erik Ogard, director of multi-strategy investments at Russell Investments, which oversees $163.4 billion, said in an interview with Susan Li on Bloomberg Television’s “First Up.” “There are real economic things to be worried about, however it’s the degree of the reaction that we think might just be a little overdone.”
Citigroup Inc. cut its forecasts for expansion in the world’s largest economy, while Morgan Stanley lowered targets for stock indexes in Indonesia and Singapore. Regulators from the U.S., South Korea and Sweden said market turmoil posed further risks to growth, after data yesterday showed American jobless claims rose and a measure of manufacturing contracted.
The S&P 500 has lost 3.2 percent this week. It is down 16 percent from its April 29 high, matching the retreat between April 23 and July 2, 2010, previously the biggest contraction of the bull market that began in March 2009. The Dow yesterday lost more than 400 points for the fourth time this month.
Shares of Hewlett-Packard Co. (HPQ), the world’s largest computer maker, added to stock losses in extended trading after the company agreed to buy software maker Autonomy Corp. for $10.3 billion and will weigh a breakup that would unravel the purchase of Compaq Computer Corp. Hewlett-Packard had earlier cut its full-year profit forecast.
Brocade Communications Systems Inc., a maker of switches for data-storage networks, lost 3.6 percent in after-market trading following a third-quarter revenue report that missed forecasts.
The U.S. economy may expand less than previously forecast in 2011 and 2012 because of potential “political paralysis” and fiscal tightening steps, Citigroup analysts wrote in a report dated yesterday. The brokerage cut its 2011 gross domestic product growth forecast to 1.6 percent from 1.7 percent and lowered its 2012 GDP growth estimate to 2.1 percent from 2.7 percent.
Source: Lynn Thomasson (Bloomberg)