U.S. Stock-Index Futures Fall on Growing Ukraine Concern

August 6, 2014

New York (Aug 6)  U.S. stock-index futures declined, after the index closed at a two-month low, as a buildup of Russian troops on the Ukrainian border intensified investor concern that the crisis will escalate.

Sprint Corp. slid 17 percent in pre-market New York trading after a person with knowledge of the matter said it ended talks to acquire T-Mobile US Inc. Groupon Inc. slumped 17 percent after its third-quarter earnings trailed analysts’ estimates. Time Warner (TWX) Inc. tumbled 9.7 percent in early New York trading after Rupert Murdoch’s 21st Century Fox Inc. withdrew its unsolicited takeover bid for the company.

Standard & Poor’s 500 Index futures expiring next month retreated 0.3 percent to 1,908.1 at 7:25 a.m. in New York, after earlier advancing as much as 0.3 percent. The S&P 500 yesterday dropped 1 percent to the lowest level since May. Dow Jones Industrial Average contracts declined 44 points, or 0.3 percent, to 16,322 today.

“Ukraine is the obvious mover,” Ben Kumar, an investment manager who helps manage $7 billion at Seven Investment Management LLP in London, said. “Various companies when releasing their earnings in Europe, the chief executives have been coming out and saying Ukraine is hurting sales. That’s now got people in the U.S. worried because the S&P 500 is a pretty global market and if things are hurting big German manufacturing companies they are going to hurt U.S. companies as well.”

NATO Deputy Secretary General Alexander Vershbow said that Russia has amassed about 20,000 troops along its border with eastern Ukraine. Polish Foreign Minister Radoslaw Sikorski said on local TV yesterday that the increased presence of Russian troops may be preparation for an invasion.

Russia Retaliation

Russian President Vladimir Putin is showing no sign of backing down over Ukraine, and said his government has proposed retaliatory measures after the U.S. and the European Union tightened sanctions last week.

Viacom Inc. and Ralph Lauren Corp. are among 25 S&P 500 companies reporting earnings today. About 76 percent of those that have posted results this season have beaten analysts’ estimates for profit, while 65 percent exceeded sales projections, data compiled by Bloomberg show.

Profit probably rose 9.4 percent in the second quarter, while sales gained 4.2 percent, according to analyst estimates compiled by Bloomberg.

Sprint slid 17 percent to $6.03. Regulatory concerns outweighed the potential benefits of a merger with T-Mobile US that would combine the third and fourth-largest U.S. wireless carriers, according to the person with knowledge of the matter.

Groupon Slides

Groupon (GRPN) slumped 17 percent to $5.86. The company forecast third-quarter earnings of no more than 2 cents a share, excluding some items, compared with the average analyst estimate of 3 cents a share. Second-quarter earnings came in at 1 cent a share, excluding some items, according to a statement. That matched the 1-cent average estimate. Sales rose 23 percent to $752 million, missing the $762 million average projection.

Time Warner dropped 9.7 percent to $76.89 as Murdoch’s Fox withdrew its $75 billion offer. The billionaire chairman of Fox gave up after Time Warner’s board refused to engage in talks and Fox’s stock price slid 11 percent since the offer became public.

Walgreen Co. (WAG) retreated 12 percent to $61. The biggest U.S. drugstore chain said it will pay about $5.29 billion in cash plus $10 billion in Walgreen stock for the shares in Alliance Boots it doesn’t already hold. Walgreen owns 45 percent of Bern, Switzerland-based Alliance Boots, which has pharmacy and beauty stores in Europe.

Enphase Energy Inc. jumped 12 percent to $10.90 after forecasting third-quarter revenue of between $93 million and $98 million. That compares with the average analyst estimate of $78.3 million.

Source: Bloomberg

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