U.S. stock futures rose, following a two-day slide for the Standard & Poor’s 500 Index, as new home construction increased and investors awaited the start of a Federal Reserve meeting.
Homebuilders advanced as Lennar Corp. gained 1.3%. Electronic Arts Inc. rose 1.8% after the computer-game publisher ousted its chief executive officer. Boeing Co. advanced 0.5% after Ryanair Holdings Plc agreed to buy $15.6 billion of airplanes. Lululemon Athletica Inc. tumbled 4.7% after lowering its sales forecast on a pants shortage.
Futures on the S&P 500 expiring in June rose 0.2% to 1,550 at 9:15 a.m. in New York. The equity benchmark fell 0.6% yesterday after the euro area forced Cyprus to extract a levy from bank deposits in return for a bailout. Dow Jones Industrial Average contracts added 21 points, or 0.2%, to 14,411 today.
“Housing is going to provide a positive backdrop to the macro economic environment and as such stocks,” Michael Mullaney, the chief investment officer at Fiduciary Trust in Boston, which manages about $9.5 billion of assets, said in a phone interview. “We don’t think that the market is in any serious condition for a significant sell-off. If it does pull back it will just be a buying opportunity at lower prices.”
The Federal Open Market Committee begins a two-day meeting at 9 a.m. today. The policy makers agreed in December to link record-low interest rates to thresholds for unemployment and inflation so that investors and households know what conditions will prompt the Fed to consider raising rates.
Housing Starts
Builders broke ground on 917,000 homes at an annual rate, up 0.8% from a revised 910,000 pace in January that was higher than initially estimated, the Commerce Department reported today in Washington. Building permits, a proxy for future construction, advanced 4.6% to 946,000, the strongest since June 2008.
U.S. stocks fell yesterday as the Cypriot bank levy sparked concern that the euro area’s debt crisis will reignite.
Cypriot lawmakers meet at 6 p.m. in Nicosia today to debate how to spread a proposed charge on bank deposits among account holders. The levy, announced on March 16, sparked concern among investors about setting a precedent by breaking the taboo against raiding bank accounts. A European Union official said today that Cyprus is an “entirely unique” situation.
“We are talking about a one-off levy,” Simon O’Connor, spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn, told reporters in Brussels.
Bull Market
The bull market in U.S. equities entered its fifth year this month. The S&P 500 has more than doubled from its bottom in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases by the Fed. The S&P 500 rose to within two points of its 2007 record last week while the Dow reached an all-time high.
Homebuilders gained. Lennar advanced 1.3% to $42.10 and D.R. Horton Inc. climbed 1.2% to $24.53.
Electronic Arts advanced 1.8% to $19.05. The second- largest U.S. computer-game publisher ousted John Riccitiello as chief executive officer. Chairman Larry Probst, 63, who ran Electronic Arts until 2007, becomes executive chairman and will lead the management as the board seeks a new CEO, according to a statement.
The publisher of “Medal of Honor” and the multiplayer “Star Wars” also said that earnings for the current quarter may fall short of analysts’ estimates.
Boeing climbed 0.5% to $85.57. Ryanair agreed to buy 175 Boeing 737 jets worth $15.6 billion at list prices. The planes will be delivered by 2018.
Walgreen, AmerisourceBergen
AmerisourceBergen Corp. surged 6% to $51.21 and Walgreen Co. added 2.5% to $43.50. Walgreen, the largest U.S. drugstore chain, and Alliance Boots GmbH agreed to a long- term partnership with AmerisourceBergen, gaining the right to acquire a minority stake in the pharmaceutical services provider.
Cardinal Health Inc. dropped 7.4% to $42.70 after saying its pharmaceutical distribution contract with Walgreen won’t be renewed after it expires in August. Walgreen accounted for about 21% of Cardinal’s revenue in 2012.
Walgreen today also reported second-quarter earnings that topped analysts’ estimates.
Lululemon tumbled 4.7% to $62.81. The Canadian yoga- wear retailer said a shortage of a women’s pants line will have a “significant” effect on financial results and will lead to lower-than-forecast first-quarter revenue. Certain shipments of it’s black Luon pants are too sheer and don’t meet the company’s standards, impacting about 17% of all women’s pants in its stores, the company said.
