Azernews.Az

By Bloomberg

U.S. stock-index futures dropped, signaling a second day of losses for the Standard & Poor’s 500 Index, as equities followed bonds lower across the world.

E-mini contracts on the S&P 500 expiring next month fell 0.6 percent to 2,086 at 8:30 a.m. in New York after sliding as much as 0.9 percent. The biggest decline since January for energy shares dragged equity benchmark gauges lower on Monday. Contracts on the Dow Jones Industrial Average lost 115 points, or 0.6 percent, to 17,926.

“Equities have actually managed to hold on despite a series of disappointing macro data and rising bond yields,” SEB AB’s Thomas Thygesen head of cross-asset strategy, said by phone from Copenhagen. “We’re all betting that U.S. growth will pick up again, and the risk is that it doesn’t. Stocks will feel more comfortable about higher bonds yields if we get a confirmation that the winter weakness was just temporary.”

A global fixed-income rout is spreading to other markets as the European Central Bank’s quantitative easing helps push global debt valuations to extreme levels while traders grow more confident that the Federal Reserve will delay raising interest rates until later this year to allow for the economic recovery to gain momentum.

Although the timing is uncertain, the Fed’s first rate increase since 2006 will usher in a “regime shift” that will stir financial markets when it occurs, said New York Fed President William C. Dudley on Tuesday. San Francisco Fed President John Williams, who votes on policy this year, speaks at the New York Association for Business Economics from 12:45 p.m. in New York.

Whipsawed Stocks

Concern the Fed would raise borrowing costs even with economic data missing projections, along with estimates for a slump in corporate profits, have whipsawed stocks between gains and losses in the past five weeks. Equities posted their biggest rally since March on Friday, after a report showed hiring bounced back in April from a winter slowdown.

Data for April are due later this week on retail sales and industrial production. A Friday report may show consumer sentiment remained near its highest level since 2007 this month.

Companies are beating earnings estimates and analysts have reversed their predictions for a decline. S&P 500 members are now on track to deliver income growth of 0.2 percent in the first quarter, compared with projections for a 5.8 percent decline as recently as March. Analysts still predict declines in the following two quarters.

Hilton Worldwide

Among stocks moving on corporate news, Hilton Worldwide Holdings Inc. dropped 1.8 percent as Blackstone Group LP offered to sell 90 million shares of the world’s biggest hotel operator.

Rackspace Hosting Inc. tumbled 15 percent after saying sales growth will slow this quarter. Gap Inc. slipped 3.5 percent after April same-store sales trailed projections amid continued lackluster demand for the company’s flagship brand.

Pall Corp. surged 20 percent after the Wall Street Journal reported the maker of water-filtration and purification systems was close to being bought for more than $10 billion.

AOL Inc. jumped 18 percent after Verizon Communications Inc. agreed to buy it in a deal valued at $4.4 billion. Verizon slipped 0.3 percent.

PartnerRe Ltd. gained 2.3 percent after Exor SpA raised its takeover offer to overcome a rival offer from Axis Capital Holdings Ltd.