U.S. Stock Futures Decline Amid Hong Kong Protests, Data

By Namitha Jagadeesh

Sept. 29 (Bloomberg) -- Dean Curnutt, chief executive officer of Macro Risk Advisors LLC, talks about the outlook for market volatility. Curnutt speaks with Tom Keene, Adam Johnson and Lisa Abramowicz on Bloomberg Television's "Surveillance." BlackRock's Nigel Hart also speaks. (Source: Bloomberg)

U.S. stock-index futures fell, signaling shares will extend a drop after their worst week in eight, as protests escalated in Hong Kong and investors weighed economic data to gauge the timing of higher interest rates.
Apple Inc. declined 1.2 percent after falling for two straight weeks. Civeo Corp. plunged 30 percent after saying it won’t convert to a real estate investment trust. DreamWorks Animation SKG Inc. jumped 25 percent after people familiar with the matter said it is weighing a takeover offer from SoftBank Corp. Athlon Energy Inc. surged 24 percent after Encana Corp. agreed to buy it.
Futures on the Standard & Poor’s 500 Index (SPX) expiring in December lost 0.6 percent to 1,964.3 at 8:37 a.m. in New York. Contracts on the Dow Jones Industrial Average slipped 92 points, or 0.5 percent, to 16,938. Nasdaq 100 Index contracts fell 0.6 percent.
“I don’t expect markets to be
strong while investors are waiting for the next earnings season to start,” said Pierre Mouton, who helps oversee $8 billion at Notz, Stucki & Cie. in Geneva. “We’re seeing some nervousness, with small-caps posting a weak performance. Really strong economic data could be difficult for markets in the short term, although positive in the long term.”
The equity benchmark gauge slid 1.4 percent last week amid an escalation in the Middle East conflict and a selloff in small-capitalized stocks and technology shares. It jumped 0.9 percent on Sept. 26 after a report showed the U.S. economy expanded in the second quarter at the fastest rate since 2011.
Data today showed consumer spending in the U.S. rebounded in August as further job gains encouraged households to loosen their purse strings. Purchases increased 0.5 percent last month after little change in July, Commerce Department figures showed today in Washington. The median forecast of economists in a Bloomberg survey called for a 0.4 percent gain. Incomes increased 0.3 percent.

Home Sales

A separate report from the National Association of Realtors at 10 a.m. in Washington may show pending home sales fell 0.5 percent in August, following a 3.3 percent gain in July, according to the median economist forecast in a Bloomberg survey.
Investors are analyzing reports to assess whether economic growth is strong enough to withstand higher interest rates. The S&P 500 reached a record on Sept. 18 as the Federal Reserve maintained a commitment to keep interest rates near zero for a considerable time after completing asset purchases. The central bank also said that the timing could move forward if data continue to exceed expectations.
U.S. data on employment and output from the manufacturing and services industries are due this week, and companies next month will begin to report earnings for the third quarter. Alcoa Inc. unofficially kicks off the earnings season when it reports quarterly results on Oct. 8.

Hong Kong

Geopolitics continue to weigh on equities. Investors are watching the situation in Syria, where the U.S. and its allies are carrying out strikes against Islamic State positions. Equity markets overseas slumped today as tens of thousands of pro-democracy protesters poured back into the streets of Hong Kong to press demands for free and open elections.
Large speculators such as hedge funds have become more bearish on small-capitalization stocks, pushing short sales on the Russell 2000 to a three-year high. The companies listed on the index, with a valuation 60 percent higher than the broader market, are more vulnerable to increases in interest rates because of a reliance on borrowing.
Apple dropped 1.2 percent to $99.54 after people familiar with the matter said the European Union will probe the iPad maker’s tax breaks in Ireland.

Software Update

The company fell last week amid reports that its latest iPhone had software problems and bent. Apple has since introduced smartphones with a glitch-free software update, while Consumer Reports tests showed the handset could keep its shape under pressure.
Civeo sank 30 percent to $17.83 after also saying it will re-domicile to Canada. The provider of workforce accommodation said it expects 2015 revenues and margins to be “materially lower” than in 2014.
DreamWorks Animation surged 25 percent to $28. Tokyo-based SoftBank has made a $3.4 billion offer for DreamWorks Animation, valuing the shares at $32 each, the Hollywood Reporter said on Sept. 27. That would be 43 percent more than the stock’s closing price on Sept. 26.
Athlon Energy jumped 24 percent to $58.11 after Encana agreed to buy it for $7.1 billion.