U.S. Index Futures Little Changed Amid Spate of Earnings Reports

(Bloomberg) -- U.S. index futures were little changed amid a batch of earnings from Walt Disney Co. to Wendy's Co., with the S&P 500 Index hovering near an all-time high.

Contracts on the S&P 500 expiring in September added 0.1 percent to 2,180.25 at 8:39 a.m. in New York. The benchmark closed little changed on Tuesday, while speculators have increased bets in volatility markets that U.S. stocks will keep rallying. Dow Jones Industrial Average futures increased 12 points to 18,478 today.

The S&P 500 has pushed its annual increase to 6.7 percent and its valuation to the highest in more than a decade on an estimated earnings basis amid better-than-expected earnings and improving economic data. Still, the benchmark has failed to rise or fall more than 1 percent in either direction for 22 straight days, the longest such streak since 2014. The lack of price swings had sent the CBOE Volatility Index to a more than two-year low.

“The earnings season has been very, very solid and this is what investors have been looking for, but earnings growth is still flat,” said Christian Stocker, a strategist at UniCredit Bank AG in Munich. “At these record levels, this makes stocks valuations very high and that may remain in investors' focus. The drive in the market came mainly from defensives and that's not a long-lasting trend. This could remain a concern and we need strong economic growth momentum for a switch into cyclicals.”

More than 90 percent of S&P 500 members have posted quarterly results this season, of which 78 percent beat profit predictions and 56 percent topped sales projections. Michael Kors Holdings Ltd., among four companies on the index reporting today, fell 5 percent after its quarterly comparable sales fell more than expected.

Analysts have tempered their estimates for a decline in second-quarter net income to 2.7 percent, from a 5.8 percent drop less than a month ago. Forecasts for the current quarter ending in September have turned negative, indicating a sixth consecutive period of falling profits, the longest since the financial crisis.

Among shares moving on corporate news, Walt Disney Co. declined 1.4 percent after its cable TV unit registered a narrow increase in quarterly earnings, reflecting tough times for the business. The company is also paying $1 billion for a stake in an online streaming business and launching a new web-based ESPN service this year.

Wendy's Co. slipped 4 percent after its profit exceeded forecasts while North American system comparable sales were short of estimates.

Perrigo Co. plunged 14 percent after cutting its annual earnings forecast, citing revised expectations for competition and price erosion at its Rx unit. SunPower Corp. tumbled 30 percent after the second-biggest U.S. solar manufacturer scrapped a target to at least break even this year, in part because of challenging conditions in its power-plant business.

Yelp Inc. rallied 14 percent after posting a surprise profit in the second quarter and raising its year-end estimates. Fossil Group Inc. added 5.9 percent, Ralph Lauren Corp. gained 6 percent after their profits beat estimates.

To contact the reporter on this story: Roxana Zega in Zurich at rzega@bloomberg.net. To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net, John Shipman, Namitha Jagadeesh