U.S. Stock Futures Gain

U.S. Stock Futures Gain Following Growth in Private Employment

By Michael P. Regan

July 2 (Bloomberg) -- U.S. stock-index futures gained after the government reported an 83,000 increase in private payrolls, easing concern that the job market will fail to recover.

Futures on the Standard & Poor’s 500 Index, which slid to a nine-month low yesterday, climbed 0.6 pecent to 1,027.7 at 8:32 a.m. in New York. Dow Jones Industrial Average futures increased 0.4 percent to 9,698.

U.S. stocks fell yesterday, sending the S&P 500 lower for the eighth day in nine, as weaker-than-estimated data on manufacturing and home sales fueled concern that the recovery is in peril.

The S&P 500 tumbled 12 percent in the second quarter to the cheapest level in more than a year on concern a sovereign-debt crisis in Europe and China’s moves to slow the world’s largest emerging economy will dent global growth.

The S&P 500 closed yesterday at 12.6 times projected profits for its companies, according to Bloomberg data, its cheapest valuation since March 2009, when the gauge began an 80 percent rally.

The S&P 500 traded at yesterday’s close with a PEG ratio, or its price-earnings multiple using 2009 profit divided by forecast annual income growth through 2012, of 0.78, according to data compiled by Bloomberg. The indicator was a favored tool of Fidelity Investments fund manager Peter Lynch, who said stocks trading with a PEG less of than 1 were undervalued.

The S&P 500 has declined 6.8 percent since the government said on June 4 that private employers added 41,000 jobs, 77 percent fewer than forecast. The equity index slid 5.4 percent in June after losing 8.2 percent in May, the biggest two-month loss since the start of 2009, data compiled by Bloomberg show.