U.S. Index Futures Little Changed as IBM Slips, Netflix Rallies

By Sofia Horta e Costa

U.S. stock-index futures were little changed, as investors considered earnings reports to gauge equity valuations.
International Business Machines Corp. slipped 2.6 percent in premarket trading after its 2015 earnings forecast trailed some analysts’ estimates. Netflix Inc. rallied 16 percent as it posted better-than-projected subscriber growth and said it will complete its global expansion within two years. EBay Inc., American Express Co. and SanDisk Corp. are among companies reporting financial results today.
Futures on the Standard & Poor’s 500 Index expiring in March added less than 0.1 percent to 2,015.7 at 9:59 a.m. in London. Dow Jones Industrial Average contracts lost 38 points, or 0.2 percent, to 17,423.
“Although investors are very edgy right now, U.S. equities still
have a bit further to go,” said William Hobbs, head of equity strategy at Barclays Plc’s wealth-management unit in London. “The hurdle is just a little bit higher because there has been such a big consensus favoring the U.S. and sentiment is already pretty hot on growth. None of these markets are particularly inexpensive, so the bulk of your returns this year should come from earnings growth and dividends.”
The S&P 500 rose for a second day on Jan. 20 as technology shares rallied. The benchmark measure is still down 3.3 percent from a record on Dec. 29 amid a slump in oil, shrinking earnings estimates and concern over slowing global growth. Commerce Department data at 8:30 a.m. in Washington may show new-home construction in the world’s largest economy exceeded a 1 million annualized rate for a fourth month.

Stimulus Speculation

Global shares have advanced since the Swiss central bank unexpectedly ended a cap on the franc on. Jan. 15, increasing speculation the European Central Bank will add stimulus measures at a meeting on Jan. 22. President Mario Draghi will probably announce a 550 billion-euro ($636 billion) program of quantitative easing, economists said in a Bloomberg survey.
Profit at S&P 500-listed companies probably climbed 0.8 percent in the final three months of 2014, analysts predicted, down from an October estimate of 8.1 percent. The U.S. equity benchmark is trading at 16.6 times its members’ projected earnings, according to data compiled by Bloomberg. Valuations reached a five-year high at the end of last year.
IBM declined 2.6 percent after forecasting that 2015 operating earnings would not exceed $16.50. Analyst estimates ranged from $15.17 to $18.55, according to data compiled by Bloomberg. Interactive Brokers Group Inc. slid 1.2 percent in extended New York trading as fourth-quarter profit fell short of projections.
Netflix jumped 16 percent in early New York trading after saying a record gain in international subscribers boosted the worldwide total to 57.4 million. The company said it plans to be in all 200 countries that have broadband Internet service by the end of 2016 while staying profitable.
Cree Inc. rose 3.9 percent in Germany. The maker of light-emitting diodes reported quarterly profit and sales that beat analysts’ estimates. Short interest for the stock was more than 18 percent of shares outstanding this week, according to London-based Markit, a financial-data provider.