Futures Higher; Retail, Best Buy Limit Gains
US stock index futures rebounded after a sharp Europe-sparked selloff Monday, positive despite bad news out of the retail sector.
Leading electronics retailer Best Buy missed its earnings targets and sale shares tumble, while a separate report showed retail sales considerably weaker in November than expected.
Retail sales rose just 0.2 percent, well below expectations of 0.5 percent, according to an initial reading of pre-holiday activity.
The reading "suggests that the start of the holiday shopping season has not been half as strong as retailers’ spectacular Black Friday sales reports suggested," said Paul Dales, senior US economist at Capital Economics in Toronto.
A Treasury bill auctionin Spain provided at least a bit of hope that investors were showing some confidence in European debt. The sale produced a yield a full percentage point lower than a month ago, though the rate was still elevated.
The Federal Reserve will announce results of its monthly meeting at 2:15 p.m. New York time, but market watchers do not expect any change in the central bank's monetary stance.
"We expect the (Fed Open Market) Committee to focus on the risks to the outlook and to adopt new language aimed at improving its 'guidance' about the likely path of future policy moves, despite recognizing that December is not ideal for policy changes due to market illiquidity and the lack of a press conference," George Goncalves, fixed income strategist at Nomura, wrote in a note to clients.
In an earlier report, small business confidence showed some improvement. The National Federation of Independent survey rose to 92.0, though the organization said the measure showed only a modest improvement.
On the earnings front, electronics merchant Best Buy threatened to undo the morning's optimism, turning in earnings that were well below Wall Street expectations. The electronics retailer reported profit of 47 cents a share, missing its bottom-line expectations by four cents, while revenue was just below estimates. Shares tumbled 9.5 percent premarket.
In company news, luxury home builder Toll Brothers could be under some pressure after Citigroup downgraded the company to neutral based primarily on valuation. The stock has risen 18 percent over the past five weeks, though Citi says it is still "positive on the (Toll Brothers) story." Shares were off 2 percent in light premarket trading.
Dow component DuPont shares, though, rose in premarket trading after the company, at its Investor Day, reaffirmed an optimistic forecast of 7 to 12 percent compound annual growth in both sales and earnings. Shares gained 1.5 percent.
In other corporate news, Reuters reported that Deutsche Boerse and NYSE Euronext have offered to sell NYSE's stock derivatives business Liffe to appease European Union officials' concerns that the combination between it and Deutsche Boerse's Eurex would create a monopoly over trading in European-listed derivatives.
Washington Mutualsaid in a court filing late on Monday that it reached a settlement in a dispute that had prevented it to emerge from Chapter 11 bankruptcy procedures. The bank said the shareholders would drop legal claims against certain creditors.