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U.S. Stock-Index Futures Little Changed After Rally in S&P 500

October 11, 2013

Oct. 11 (Bloomberg) -- U.S. stock-index futures were little changed, following the second-biggest gain of the year for the Standard & Poor’s 500 Index, as lawmakers continued talks to raise the government’s debt limit to avoid a default.

JPMorgan Chase & Co. rose 1.1 percent as adjusted third- quarter earnings topped estimates. Wells Fargo & Co. slumped 1.8 percent as its results showed weakness in mortgage lending. Potash Corp. of Saskatchewan Inc., North America’s largest producer of the plant nutrient, dropped 0.4 percent after cutting its profit forecast.

S&P 500 futures expiring in December fell 0.1 percent to 1,684.1 at 8:52 a.m. in New York. Contracts on the Dow Jones Industrial Average gained 2 points, or less than 0.1 percent, to 15,035.

The S&P 500 yesterday jumped 2.2 percent, the most since Jan. 2, as lawmakers moved toward an agreement to increase the debt ceiling and avoid a default for a month. President Barack Obama and House Republican leaders met for 90 minutes at the White House yesterday even as they remained at odds over terms for ending the partial government shutdown.

"It’s worrisome if it is prolonged, but they are going to come to some resolution," said Grant Bughman, who helps oversee $643 billion at UBS Global Asset Management in New York. "The risk is if they fail to reach an agreement, then all bets are off. That will have a material impact on growth and on equities. But we think that is an extremely unlikely scenario."

 

Dwindling Funds

 

Without an increase to the debt limit, the U.S. will exhaust its borrowing authority on Oct. 17 and would run out of funds to pay all of its bills sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

JPMorgan rose 1.1 percent to $53.08. The bank reported its first quarterly loss under Chief Executive Officer Jamie Dimon after taking a $7.2 billion charge for legal expenses. Earnings on an adjusted basis still beat analysts’ estimates.

Wells Fargo slipped 1.8 percent to $40.71. The largest U.S. home lender said third-quarter profit climbed 13 percent to a record as fewer loan defaults and lower expenses helped overcome weakness in mortgage lending.

Chief Financial Officer Timothy Sloan, 53, told analysts last month that mortgage originations and profit margins on selling home loans would fall in the third quarter. Borrowers were discouraged as interest rates rose amid speculation that the Federal Reserve would pare its efforts to stimulate the economy with low rates.

 

Potash Earnings

 

Potash Corp. fell 0.4 percent to $31.60. The company said yesterday third-quarter earnings will be about 41 cents a share after customers deferred purchases amid predictions that prices for its main product will slump. In July, it predicted profit of 45 cents to 60 cents. The average of 27 analyst estimates compiled by Bloomberg was for 47 cents, excluding one-time items.

Micron Technology Inc., the largest U.S. maker of memory chips, fell 1.5 percent to $18.15 even as the company reported fiscal fourth-quarter sales that exceeded analysts’ estimates. Following the report, Wells Fargo lowered its recommendation on the shares to underperform, or sell, from market perform, or hold, citing valuation. The stock has almost tripled this year.

Safeway Inc., the second-largest U.S. grocery-store chain, rose 7.5 percent to $33.93. The company reported yesterday after markets closed that identical-store sales will rise as much as 1.9 percent this year. Safeway also said it will leave Chicago by selling its stores there.

 

--With assistance from Aubrey Pringle in New York. Editors: Jeff Sutherland, Srinivasan Sivabalan

 

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

 

To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net

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