U.S. stock-index futures dropped, with equity benchmarks near records, as investors weighed prospects for economic growth and corporate earnings to help gauge the pace of the recovery.
Standard & Poor's 500 Index futures expiring in December fell 0.2% to 2,007.5 at 10:56 a.m. in London, tracking European shares that fell after officials cut growth forecasts for the euro area. Futures on the Dow Jones Industrial Average lost 22 points, or 0.1%, to 17,263 Tuesday.
The S&P 500 has rebounded 8.3% from a six-month low on Oct. 15, fueled by better-than-forecast economic data and improving earnings reports. The gain has pushed the index to trade at 16.8 times the members' projected profit, near its highest multiple since 2009. Both the S&P 500 and the Dow closed at all-time highs last week amid optimism the Bank of Japan's stimulus will fill some of the gap left by the end of Federal Reserve bond buying.
“We are seeing weaker macro data in Europe but I think investors will come to terms with slower growth,” said James Butterfill, head of global equity strategy at Coutts & Co. in London. “'When you take away the stimulus of quantitative easing, something has got to fill in that void. This time it's earnings providing the support. Not only are companies beating expectations, but profit growth is pretty good.”
Investors will be looking for more evidence that the world's largest economy can sustain a withdrawal in central-bank stimulus. A Commerce Department report at 10 a.m. in Washington will probably show factory orders slipped 0.6% in September, following a 10% slump in August.
Other releases this week will probably show services industries grew last month, while the unemployment rate remained at a six-year low.
Earnings reports may provide further clues to the health of the U.S. economy. Prudential Financial Inc., 21st Century Fox Inc., and Walt Disney Co. are among more than 80 S&P 500 companies posting financial results this week.
Of the S&P 500 companies that have reported results so far for the third quarter, 80% have exceeded profit projections, while 59% posted better-than-forecast sales.
Sprint Corp. dropped 8.4% to $5.68 in pre-market New York trading. The wireless carrier said monthly subscribers fell by 272,000 during the quarter ending in September, worse than analysts expected. Half a million phone customers left, according to a statement.
Herbalife Ltd. tumbled 13% to $48.53 in German trading. The nutrition company cut its earnings forecast for the year while saying third-quarter profit was $1.45 a share. Analysts estimated EPS of $1.51 on average.
American International Group Inc. added 1.1% to $54.40 in New York. The insurer said operating profit was $1.21 a share in the third quarter, beating the $1.09 average analyst estimate. AIG also said book value, a measure of assets minus liabilities, climbed in the period.
L Brands Inc. (LB) climbed 3% to $74.59 in Germany. The owner of the Victoria's Secret lingerie brand raised its third-quarter earnings forecast to at least 38 cents a share. That's higher than its previous projection of not more than 31 cents and beats the average analyst estimate of 32 cents.
Tenet Healthcare Corp. added 2.8% to $58.32. The hospital chain posted adjusted earnings and sales for the third quarter that exceeded estimates.