US stock futures decline as Greece will hold new elections

Do over!

May 15 (Bloomberg) -- U.S. stock futures fell, after the Standard & Poor’s 500 Index slumped to a three-month low, as Greek Pasok party leader Evangelos Venizelos said new elections will be held after attempts to form a government failed.

Avon Products Inc. tumbled 14 percent after Coty Inc. withdrew its $10.7 billion offer for the door-to-door cosmetics seller. Home Depot Inc., the largest U.S. home-improvement retailer, slid 3.9 percent after forecasting profit that was less than analysts forecast. Groupon Inc. rose 25 percent as the largest daily-deal website reported profit that beat estimates.

S&P 500 futures expiring in June fell 0.1 percent to 1,332.70 at 9:15 a.m. New York time. Dow Jones Industrial Average futures lost 12 points, or 0.1 percent, to 12,643.

Equity futures reversed gains as Greek presidency official Costas Bitsios confirmed that elections will now be held in comments to reporters in Athens and said a meeting tomorrow will be held to form a caretaker government to lead the country to elections.

Earlier today, stock futures gained as manufacturing in the New York region expanded more than forecast in May as shipments surged and new orders improved. Germany helped the euro area avoid its second recession in three years as growth in the region’s largest economy offset contractions in peripheral countries.

Stocks fell for a second day yesterday as Greece struggled to form a new government amid growing speculation the nation may leave the European currency. The decline trimmed this year’s gain in the S&P 500 to 6.4 percent. European governments hinted at giving Greece extra time to meet budget-cut targets, as long as the financially stricken country’s feuding politicians put together a ruling coalition committed to austerity.

Facebook’s IPO

Facebook Inc. raised the price range in its initial public offering, increasing the amount it is seeking in the record sale for an Internet company to as much as $12.8 billion.

The new range of $34 to $38 a share, announced in a regulatory filing today, is up from a previous range of $28 to $35. Facebook is seeking a valuation as high as $104.2 billion, based on the upper end of the new range.

Chief Executive Officer Mark Zuckerberg, in a roadshow to pitch the IPO to investors, may be winning over skeptics who initially balked at buying the shares, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.

“Raising the range would be the best signal of what the underwriters are hearing from their institutional buyers who have seen the roadshow,” Gordon said. “Despite the doubts, the buyers like what they’re hearing.”

More Than Double

At the upper end of the new range, Facebook would be valued at 26 times trailing 12-month sales, more than double Google Inc.’s valuation when the search-engine operator went public in 2004. The company was already in a position to surpass United Parcel Service Inc. as the most valuable company in history to go public in the U.S., based on market capitalization, data compiled by Bloomberg and Dealogic show.

The S&P 500 took longer than usual to fall 5 percent from its peak this year, a sign that any further retreat in U.S. stocks will be “contained,” according to Sam Stovall of S&P.

The benchmark gauge reached the threshold yesterday after spending 28 days without losing 5 percent from its April high. Since 1950, it has taken an average 19 days to fall 5 percent, based on a study by Stovall, S&P’s New York-based chief equity strategist.

Among those that took 28 days or longer to occur, only 25 percent eventually turned into corrections, or retreats of more than 10 percent, the data show. Stovall said in an e-mail that he views losses of less than 5 percent as “noise” and those of between 5 percent and 10 percent as pullbacks.

“The duration of this ‘noise’ likely indicates that the ultimate decline will be contained, unless new worries emerge or existing concerns become increasingly intensified in the coming weeks or months,” Stovall wrote yesterday. “The market will eventually bottom in a ‘pullback’ mode.”

Bloomberg News

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