Futures point to bounce after Thursday selloff

Reuters News
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Posted: May 29, 2012 4:31 AM
Futures point to bounce after Thursday selloff
By Chuck MikolajczakNEW YORK (Reuters) - Stock futures rose on Friday, indicating the benchmark S&P 500 index may rebound from its second-worst decline of the year.The index dropped 2.2 percent in the prior session, its biggest drop since a 2.5 percent fall on June 1, as evidence mounted of slowing manufacturing growth worldwide, a threat to corporate profits."They are certainly trying to recover from yesterday's (Thursday's) huge losses," said Rick Meckler, president of investment firm LibertyView Capital Management in New York."The market was either hoping things were bad enough before the (Fed) meeting to have them act - or recover - and you hit that unfortunate part where it's bad, but it's not bad enough and that was very disappointing to the market."Futures briefly pared gains on Friday after U.S. central bank official Jeffrey Lacker, an inflation hawk, said the latest monetary stimulus risks higher inflation and will not do much to boost a weakening U.S. economy.After falling for two consecutive sessions, the S&P 500 index is down 1.3 percent for the week, but remains on track for its first monthly gain in three months.Investors will eye banking shares after ratings agency Moody's downgraded 15 of the world's biggest banks on Thursday, lowering credit ratings by one to three notches to reflect their risk of losses from volatile capital market activities.Morgan Stanley added 3.6 percent to $14.46 and Bank of America Corp rose 1.2 percent to $7.91 in premarket trade, as many of the ratings cuts weren't as deep as expected.S&P 500 futures rose 4.3 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 34 points, and Nasdaq 100 futures lost 1.75 points.European shares extended the previous session's losses, unable to rebound from poor macroeconomic data. The FTSEurofirst 300 index of top European shares was down 0.6 percent.The leaders of Germany, France, Italy and Spain will try to find common ground in Rome to restore confidence in the euro zone ahead of a full EU summit next week, which Italy's prime minister called a defining moment.Darden Restaurants Inc dipped 2.8 percent to $49 in premarket trade after the restaurant operator reported fourth-quarter earnings. The company expected its business environment in 2013 "to be similar to 2012, with slow and uneven recovery in economy and industry.Carnival Corp is also expected to post earnings on Friday.Johnson & Johnson said that U.S. regulators have declined to approve a new use for its Xarelto blood clot preventer to reduce the risk of heart attacks and strokes in patients with acute coronary syndrome.Ryder Systems Inc slumped 10.3 percent to $36.55 in premarket after the logistics company cut its quarterly earnings forecast, citing lower demand for its commercial rental services.Monster Beverage Corp added 2.5 percent to $76.58 in light premarket trade after S&P said the company will replace Sara Lee Corp in the S&P 500 after the close of trading on June 28.Asian shares fell amid fears about global growth, spurred by weak manufacturing data from the United States, Europe and China.(Editing by Bernadette Baum)