U.S. Index Futures Decline as Microsoft Drops on License Sales

By Sofia Horta e Costa

U.S. stock-index futures fell, signaling the Standard & Poor’s 500 Index will fail to hold gains from a day earlier, as investors considered disappointing corporate results and profit projections.
Microsoft Corp. fell 4.6 percent in premarket trading after posting business-software license sales that missed estimates. United Technologies Corp. slipped after a surging dollar forced a cut in its full-year profit forecast. Packaging Corp. of America lost 5.7 percent after its earnings forecast missed analysts’ projections. Pfizer Inc., Yahoo! Inc. and Apple Inc. are among 27 companies releasing quarterly results on Tuesday.
Futures on the S&P 500 expiring in March slipped 0.3 percent to 2,046.7 at 10:31 a.m. in London. The underlying gauge rose 0.3 percent yesterday amid gains in energy companies. Dow Jones Industrial Average contracts declined 63 points, or 0.4 percent, to 17,551 today.
“This earnings season comes long
enough after the currency movements that investors should start to see clues coming up, certainly in terms of the forward guidance,” said Michael Ingram, a market strategist at BGC Brokers LP in London. “There have been notable disappointments so far. The question is how much longer can U.S. corporates can give us reasons to pay a premium for this market.”

Exchanges Open

In New York, officials told residents to stay at home as a blizzard intensified throughout the night. Travel bans took effect shortly before midnight in the city, along with New Jersey and Connecticut, while airlines canceled thousands of flights through Tuesday. Commuter rail service, subways and buses in and out of Manhattan stopped running, and all trans-Hudson crossings were shut.
Exchanges plan to remain open. The last time snow prompted the New York Stock Exchange to shut down was in 1996, according to the exchange’s website.
The S&P 500 is trading at 17.1 times the projected earnings of its members, about 16 percent above its 10-year average. The multiple reached a five-year high at the end of last year, according to data compiled by Bloomberg. The measure rallied 1.6 percent last week after the European Central Bank announced a 1.1 trillion-euro ($1.2 trillion) bond-buying plan.
Of the S&P 500 (SPX) members that have reported profit so far, 76 percent have exceeded projections that analysts have lowered since late last year. Analysts predict profit at S&P 500 companies climbed 1.1 percent in the final three months of 2014, down from an October estimate of 8.5 percent.

Microsoft Sales

Microsoft dropped 4.6 percent. The world’s largest software maker said commercial-licensing revenue fell in the fiscal second quarter, curbed by a slump in China and Japan and a strengthening U.S. dollar.
United Technologies slid 0.6 percent in early trading. The company predicted 2015 profit of $6.85 to $7.05 a share, lower than a forecast given in December.
Packaging Corp. dropped 5.7 percent after saying first-quarter profit will probably not exceed $1.10 per share. Analysts on average had called for earnings of $1.25 per share.
Investors are also weighing U.S. economic data to help gauge the pace of recovery. A Conference Board report at 10 a.m. in New York may show consumer confidence climbed in January to a seven-year high, economists predicted. Other releases may show sales of new U.S. homes and orders for durable goods rebounded last month, while home prices in 20 American cities probably rose in the year ending November.