June 19 (Bloomberg) -- U.S. stock futures advanced, indicating the Standard & Poor’s 500 Index will rally for a fourth straight day, as the Federal Reserve begins a two-day meeting to decide whether more monetary stimulus is needed.
Oracle Corp., the world’s largest maker of database software, rallied 5 percent after profit topped analysts’ estimates. FedEx Corp., operator of the world’s largest cargo airline, fell 1.3 percent after predicting lower profit than analysts estimated amid slowing economic growth in the U.S.
S&P 500 futures expiring in September rose 0.4 percent to 1,346 at 9:15 a.m. New York time. Dow Jones Industrial Average futures added 49 points, or 0.4 percent, to 12,735.
“It seems that the risks out there are just easing slightly,” Tom Wirth, who helps manage $1.5 billion as senior investment officer for Chemung Canal Trust Co., based in Elmira, New York, said in a telephone interview. “With respect to the Fed extending Operation Twist, they may do it. Yet whatever reaction the market has will be short lived.”
Equity futures maintained gains after data showed that builders in the U.S. broke ground on fewer homes than forecast in May. Fed policy makers will bring new forecasts to their two- day meeting starting today as they contend with continuing financial stress in Europe. JPMorgan Chase & Co. and Jefferies & Co. predict they will extend the so-called Operation Twist. The $400 billion program, which ends this month, involved selling short-maturity debt and buying longer-term bonds.
Investors also watched the latest developments of Europe’s debt crisis. Spanish bond yields declined after the government met its target at a bill auction. Greek leaders said they would seek to renegotiate the terms of an international bailout.
Global Slowdown
Concern about a global slowdown and a worsening of Europe’s debt crisis put the S&P 500 on the brink of a so-called correction this month. It fell 9.9 percent from an almost four- year high in April through June 1. Since then, the lowest valuation in six months and bets on global policy action drove the measure up 5.2 percent through yesterday.
Oracle added 5 percent to $28.48. Chief Executive Officer Larry Ellison said Oracle won three cloud-computing deals against competitor Workday Inc. during the period ending in May, and also sold a high-end hardware system to Facebook Inc. Software license sales, an indicator of future revenue, rose 6.7 percent to $4 billion.
Microsoft Corp. gained 1 percent to $30.13. The company unveiled its own Windows-powered tablet computer called Surface, altering its strategy of focusing on software and relying on partners to make the machines in a renewed attempt to take on Apple Inc.’s iPad.
FedEx, which is considered an economic bellwether because it carries everything from mobile devices to pharmaceuticals and financial documents, retreated 1.3 percent to $87.35. Weak air freight traffic on routes from Asia to North America and Europe hurt FedEx during the quarter through May 31, said Lee Klaskow, a Bloomberg Industries analyst in Skillman, New Jersey.
Walgreen Co. slumped 5 percent to $30.35. The largest U.S. drugstore chain agreed to pay $6.7 billion for a 45 percent stake in the U.K.’s Alliance Boots with an option to gain full control in about three years.
J.C. Penney Co. lost 5.7 percent to $22.95. The company’s merchandising and marketing chief is leaving, and Chief Executive Officer Ron Johnson will take over his duties, following a marketing strategy that has flopped with shoppers. The departure comes as Johnson struggles to remake the retailer’s image and overhaul its pricing strategy.
Not Happy
“They weren’t happy with the marketing direction, and it wasn’t resonating with consumers,” said Lizabeth Dunn, an analyst with Macquarie Group in New York. “They really want to emphasize price and product more obviously in marketing.”
Barnes & Noble Inc. slumped 4.9 percent to $14.49. The largest U.S. bookstore chain posted fourth-quarter revenue that trailed analysts’ estimates.
Growing doubts about the direction of U.S. economic policy may limit any stock-market gains in the next few months, according to Myles Zyblock, chief institutional strategist at RBC Capital Markets.
“Uncertainty has started to ramp up once again,” Zyblock wrote. He mentioned three reasons for the shift: this year’s presidential election, debate over increasing the federal debt ceiling, and a so-called fiscal cliff that may result from tax increases and spending cuts set for early next year.
Domestic Headwind
Share prices may suffer along with consumer spending, hiring and investing because of “this domestically focused headwind” regardless of how the European debt crisis unfolds, the Toronto-based strategist wrote.
The Economic Policy Uncertainty Index set a record last August, when a near-failure to reach agreement on raising the debt limit led Standard & Poor’s to reduce the country’s credit rating from AAA for the first time.
The indicator is derived from estimates of U.S. economic growth and government purchases, Google News search results, and the number of expiring provisions in the federal tax code. Scott R. Baker, a graduate student at Stanford University, created the gauge with Stanford Professor Nicholas Bloom and University of Chicago Professor Steven J. Davis.
