May 10 (Bloomberg) -- U.S. stock futures rose, after the Standard & Poor’s 500 Index fell to a two-month low, as former Greece Finance Minister Evangelos Venizelos attempted to form a government that will ensure the nation remains in the euro area.
Bank of America Corp. added 1.3% to pace gains in financial shares. Avon Products Inc. gained 1.3% as Coty Inc. raised its offer for the door-to-door cosmetics seller. Monster Beverage Corp. surged 13% after the energy-drink maker reported earnings that beat estimates. Cisco Systems Inc., the biggest maker of computer-networking equipment, slumped 7.9% as sales and profit forecasts trailed projections.
S&P 500 futures expiring in June advanced 0.8% to 1,361.30 at 8:45 a.m. New York time. Dow Jones Industrial Average futures increased 58 points, or 0.5%, to 12,853.
Equity futures rebounded as Venizelos, who received today a three-day mandate to begin talks on a government, said he would approach all political party leaders and try to get New Democracy, Syriza and Democratic Left to form a pro-European national unity government.
Global stocks slumped yesterday amid concern Greece’s debt crisis is worsening as the nation struggles to form a coalition government. The standoff has reignited concerns over its ability to hold to the terms of its two bailouts negotiated since May 2010. With Parliament split, the country at the epicenter of the debt crisis is again facing the risk of an exit from the euro.
In the U.S., first-time claims for jobless benefits fell last week to a one-month low, helping allay concern that the labor market may suffer an extended setback.
Financial Shares Gain
Financial companies rebounded from yesterday’s slump as a measure of European banks gained 2.8%. Bank of America advanced 1.4% to $7.84. Citigroup Inc. gained 1.3% to $30.84.
Avon increased 1.3% to $21.89. The company announced in a statement today that it received a letter from Coty, which said it’s willing to increase its offer to $24.75 a share, up from a previous bid of $23.25. Coty also requested a response to the revised bid by the close of business on May 14.
Monster Beverage surged 13% to $74.02. Net sales rose 28% to $454.6 million as Chief Executive Officer Rodney Sacks expands into international markets, including Hong Kong and Macau last month.
Cisco slumped 7.9% to $17.29. Chief Executive Officer John Chambers said orders from big companies dropped in the third quarter, and it’s taking longer to sign large deals with corporate customers. Cisco is also concerned about demand from Europe, India and government agencies, he said.
Volatility may hurt U.S. stock investors even when the market lacks direction, according to Eugene F. Fama and Kenneth R. French, the creators of a model designed to explain equity returns. Each component of their three-factor model dropped last year for the first time since 1994. The declines occurred even though the S&P 500 was little changed.
Fama, a University of Chicago professor, and French, a professor at Dartmouth College in Hanover, New Hampshire, put together the figures used for the chart. They track return gaps between stocks and Treasury bills, between the shares of smaller and larger companies, and between value and growth stocks.
Although market returns had the biggest swings among the three factors in the past half century, “the volatility of the size and value premiums is nevertheless high,” Fama and French wrote in a paper analyzing the numbers. The research, posted on their blog three days ago, is based on data from the University of Chicago’s Center for Research in Security Prices.
Last year’s total return for all U.S. stocks, weighted by market value, was 0.9 percentage point less than the return on one-month Treasury bills with monthly reinvestment.
Smaller companies lagged behind larger ones by 5 points on a total-return basis. Each stock was placed in one category or the other. The median market value for New York Stock Exchange- listed companies was used as a cutoff.
Returns for value stocks were 6.9 points lower than for growth stocks. The classifications were tied to book value, or the value of assets after subtracting liabilities. Shares with price-to-book ratios in the bottom 30% of NYSE-listed issues were considered value, and vice versa for growth.
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