U.S. Stock-Index Futures Decline as Kerry Warns Russia

April 25, 2014

New York (Apr 25)  U.S. stock-index futures declined, indicating that equities will pare their second week of gains, as Secretary of State John Kerry warned of costs to Russia’s economy unless it eases tensions in Ukraine.

Ford Motor Co. slipped 2 percent in early New York trading after posting earnings that trailed analysts’ estimates. Amazon.com Inc. (AMZN) dropped 2.1 percent after predicting a loss in the current quarter. Microsoft Corp. (MSFT) climbed 1.4 percent after posting quarterly profit that exceeded projections. Starbucks Corp. (SBUX) added 1.6 percent after it forecast full-year earnings that beat estimates.

Futures on the Standard & Poor’s 500 Index expiring in June dropped 0.4 percent to 1,866.5 at 7:34 a.m. in New York. The equity benchmark has advanced 0.7 percent this week as companies from Apple Inc. to Netflix Inc. reported earnings that beat estimates. Dow Jones Industrial Average contracts decreased 70 points, or 0.4 percent, to 16,361 today.

“The situation in Ukraine seems to be getting more tense, making investors nervous,” said Jacques Porta, who helps oversee $780 million at Ofi Gestion Privee in Paris. “A war would be a disaster for everybody. I think they will find a deal. With the U.S. earnings season, we’re seeing some good surprises.”

Russian President Vladimir Putin has failed to meet commitments made at a meeting in Geneva a week ago to avoid an escalation of the crisis in Ukraine, Kerry said in Washington late yesterday. President Barack Obama plans to call European leaders today to discuss sanctions, following the resumption of military drills by Russian troops along the country’s border with Ukraine.

Kerry’s Threat

“If Russia continues in this direction, it will not just be a grave mistake, it will be an expensive mistake,” Kerry said. “The window to change course is closing. If Russia chooses the path of de-escalation, the international community –- all of us –- will welcome it. If Russia does not, the world will make sure that the cost for Russia will only grow.”

Some 15 S&P 500 members report earnings today. Of the 229 companies that have released results this season, 75 percent have exceeded analysts’ profit estimates, while 52 percent have beaten sales projections, data compiled by Bloomberg show.

Analysts predict the benchmark’s constituents will collectively report a 0.7 percent increase in first-quarter profit and a 2.6 percent gain in revenue.

Ford, Amazon

Ford slipped 2 percent to $16 after the carmaker posted first-quarter earnings excluding some items of 25 cents a share. That missed the 31-cent average analyst estimate.

Amazon dropped 2.1 percent to $329.95 after the world’s largest online retailer forecast an operating loss of $55 million to $455 million for the current quarter. Expenses rose 23 percent in the first quarter, limiting profit to 23 cents a share. That matched the average analyst projection.

Visa Inc. (V) slid 3.6 percent to $201.80 after the world’s biggest bank-card network posted revenue of $3.16 billion for the second quarter of its financial year. That trailed the $3.19 billion predicted by analysts in a Bloomberg survey. Putin said yesterday that Visa and MasterCard Inc. will lose market share in Russia after they blocked some transactions because of U.S. sanctions on individuals and banks.

Pandora Media Inc. lost 5.4 percent to $26.68 after forecasting that it will break even in the second quarter and may post a profit of as much as 3 cents a share. That trailed the 5-cent average estimate of analysts surveyed by Bloomberg. Chief Financial Officer Michael Herring said the company will spend aggressively on marketing to maintain its lead in online-radio services.

Microsoft, Starbucks

Microsoft advanced 1.4 percent to $40.40 after posting net income of $5.66 billion, or 68 cents a share, in the third quarter of its financial year. That beat the average analyst estimate of 63 cents. Sales of cloud-based services including Office 365 and Azure more than doubled in the quarter ended March 31, the company said.

Starbucks climbed 1.6 percent to $72.20 in premarket trading after the world’s biggest coffee-shop chain predicted profit in the 12 months through September of as much as $2.68 a share. That exceeded its previous projection of no more than $2.67 a share and the average analyst estimate of $2.66.

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