Stock futures lifted by G-20, Cat cuts forecast

By William L. Watts, MarketWatch

FRANKFURT (MarketWatch) — U.S. stock index futures traded higher Monday, after officials from the Group of 20 major economies offered tacit approval of Japan’s stimulus efforts, but trimmed gains as global bellwether and Dow component Caterpillar Inc. cut its 2013 forecast for profit and revenue.

Futures on the Dow Jones Industrial Average DJM3 +0.45% were up 51 points, or 0.3%, to 14,518, after trading as high as 14,548. S&P 500 Index futures SPM3 +0.45% advanced 6.2 points to 1,553.80. Nasdaq 100 futures NDM3 +0.53% traded up 14.25 points, or 0.5%, at 2,782.50. 

Japanese equities led a rise in Asia after finance ministers and central bankers from the G-20 late Friday refrained from criticizing Japan’s efforts to reflate its economy, which have been accompanied by a sharp fall in the yen, while making a broader call for policy makers to boost global economic growth. Read about the G-20.

It’s worth remembering, however, that U.S. equities are coming off their worst weekly performance in months, strategists said, with sentiment weakened by mixed earnings results and further signs of slowing U.S. and global growth.

Weak U.S. data could “see early optimism quickly replaced by nervous tension,” said Mike McCudden, head of derivatives at Interactive Investor in London. “Furthermore, as investors have had a tendency recently to get a tad overenthusiastic during earnings season, underlying economic data may serve as a stark reminder that rude health is still a long way off.”

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Caterpillar CAT +1.13% shares edged lower in premarket trade, after the world’s largest maker of construction and mining equipment cuts full-year 2013 outlook for sales and earnings per share.

Peoria, Ill.-based Cat said first-quarter profit fell to $1.31 a share on revenue of $13.2 billion. Analysts surveyed by FactSet had produced forecasts for profit of $1.36 a share on revenue of $13.8 billion.

Cat shares are down 10% since the start of the year as mining companies cut back on spending.

Halliburton Co. HAL -1.33% on Monday said it swung to a first-quarter loss of $18 million, or 2 cents a share, but topped analyst expectations for adjusted earnings and revenue. Halliburton shares rose 5% in premarket trade.

Video-streaming and rental firm Netflix Inc. NFLX +3.20% is set to report after the closing bell. Shares have jumped 76% since Jan. 1.

Toy maker Hasbro Inc. HAS +1.53% said its first-quarter loss widened, due partly to more restructuring charges, while revenue rose in three of its four product categories.

Of the 100 companies in the S&P 500 that had released quarterly results through Friday, 72% topped the mean estimate, slightly above the average of 70% over the past four quarters, according to FactSet.

Revenue has been a different story, with only 45% reporting above the mean estimate, trailing the 52% average of the past four quarters.

On the data front, March existing home sales are due for release at 10 a.m. Eastern. Sales are forecast to rise 1%, potentially bringing the annual sales rate above the 5 million mark for the first time since 2009.

While home sales have likely continued their upswing, fears of another spring economic swoon are on the rise after a run of weaker-than-expected data.

Reuters Enlarge Image

Caterpillar machines on a lot at a Massachusetts dealership.

But John Higgins, market economist at Capital Economics in London, contends the recent equity slide won’t turn into a rout, since weaker data means the Federal Reserve will be less likely to start scaling back its own stimulus efforts.

He expects the S&P 500 to fall to 1,500 by the end of 2013, before rallying to 1,600 in 2014.

“After all, with growth at home showing signs of slowing and inflation signs of easing, the Fed is unlikely to be in any rush to halt its asset purchases altogether. Meanwhile, an actual rate hike still seems a very long way off,” he said in a note.

European stocks were also higher Monday, tracking gains in Asia. The dollar moved within striking distance again of the 100-yen level versus the Japanese currency USDJPY -0.11% in the wake of the G-20 statement.

William L. Watts is MarketWatch's European bureau chief, based in Frankfurt. Follow him on Twitter @wlwatts.