U.S. Stock Futures Fluctuate as Alcoa Starts Earnings

New York (Oct 9)  U.S. stock-index futures fluctuated, following the Standard & Poor’s 500 Index’s biggest rally this year, as investors assessed earnings from Alcoa Inc. and PepsiCo. Inc. for clues on the strength of the economy.

Gap Inc. plunged 9.9 percent after saying its chief executive officer will step down and posting disappointing September sales. Advanced Micro Devices Inc. tumbled 6.1 percent after naming a new CEO a week before reporting earnings. Alcoa jumped 2.2 percent after reporting third-quarter earnings, the aluminum producer’s biggest in three years. PepsiCo. and Allergan Inc. rose after raising their forecasts.

Futures on the S&P 500 expiring in December fell 0.2 percent to 1,957.90 at 7:47 a.m. in New York. The benchmark gauge advanced 1.8 percent yesterday, the biggest jump since October 2013, following the Federal Reserve’s hint that interest rates will stay near zero. Dow Jones Industrial Average contracts fell 50 points, or 0.3 percent, to 16,853 today.

“We are in a phase of uncertainty until the big companies release their third-quarter figures,” said Christian Zogg, who manages about the equivalent of about $10 billion as head of equity and fixed income at LLB Asset Management AG in Vaduz, Liechtenstein. “The question in the U.S. is whether companies can keep their good margins.”

A report at 8:30 a.m. in Washington may show that first-time applications for jobless claims rose to 295,000 in the week ended Oct. 4 from 287,000 the prior week, according to economists surveyed by Bloomberg.

Slower Growth

A number of Federal Open Market Committee policy makers said U.S. growth “might be slower than they expected if foreign economic growth came in weaker than anticipated,” according to minutes from the Sept. 16-17 meeting released yesterday. In a statement following the gathering, policy makers renewed their pledge to keep interest rates near zero for a “considerable time.”

Profit at companies in the S&P 500 (SPX) rose 4.9 percent in the July-September period, according to the average estimate of analysts in a Bloomberg survey. PepsiCo and Family Dollar Stores Inc. reports earnings today.

Gap slipped 9.9 percent to $37.77. CEO Glenn Murphy was credited with reviving the apparel maker during his seven-year tenure. Art Peck, who serves as president of Gap’s growth, innovation and digital unit, will take the helm as new CEO on Feb. 1, the company said. September sales at stores open at least a year and online were little changed from a year earlier. Analysts had predicted a 1.2 percent gain.

AMD retreated 6.1 percent to $3.08. Lisa Su, who had been chief operating officer, is replacing Rory Read effective immediately, the company said yesterday. Reflecting the rushed nature of the announcement, AMD said Su is still negotiating with the board on the terms of her new employment and Read is still working out a separation agreement. The company reports earnings on Oct. 16.

Alcoa (AA) rose 2.2 percent to $16.42 in early trading. Profit excluding one-time items was 31 cents in the third-quarter, surpassing the 22-cent average analyst estimate compiled by Bloomberg. Sales also beat expectations, and Alcoa forecast record shipments to auto and aerospace customers in the current quarter.

PepsiCo added 1.3 percent to $95.16. The world’s second-largest beverage producer boosted its projection for profit growth in 2014 to 9 percent after previously forecasting an 8 percent increase. Pepsi also reported third-quarter earnings of $1.36 a share, exceeding the $1.29 EPS estimated by analysts.

Allergan rose 2.4 percent to $195. The Botox maker raised its forecast for third-quarter earnings to at least $1.78 a share, after previously predicting no more than $1.47. The company also increased its 2014 adjusted profit forecast to at least $6.20 a share from prior guidance of no more than $5.80.

Source: Bloomberg