Nov. 8 (Bloomberg) -- U.S. stock futures fell, signaling benchmark gauges may drop from two-year highs, after a five-week rally left the Standard & Poor's 500 Index at the highest valuation since May and a rising dollar dragged on commodity prices.
Alcoa Inc. and Barrick Gold Corp. fell at least 0.5 percent as metal prices declined. JDS Uniphase Corp. increased 3.9 as Barron's said growth in online video traffic will boost demand for its optical-networking products. Intel Corp. gained 1 percent as UBS AG recommended buying the shares.
December contracts on the S&P 500 decreased 0.3 percent to 1,219 at 8:57 a.m. in New York. Dow Jones Industrial Average futures slipped 0.1 percent to 11,362 today. U.S. stocks rallied last week as the Federal Reserve announced a $600 billion bond- purchase plan, employment increased more than forecast and midterm elections produced a divided Congress.
"It looks like expectations have gotten ahead of themselves," said Jeffrey Coons, president of Manning & Napier Advisors Inc. in Fairport, New York, which manages $25 billion. "The Fed announcement, the election results -- it doesn't really change the fundamentals of the environment, the weak economic growth and a very aggressive Fed policy."
Current-Account Targets
The Dow rallied to its highest level since before Lehman Brothers Holdings Inc.'s 2008 bankruptcy on Nov. 5, while the S&P 500 capped a fifth straight weekly advance to close at the highest level since the week after the Lehman filing. The advance left the S&P 500 trading at 14.4 times estimated earnings over the next year, its most expensive since May 13.
The Dollar Index, which gauges the currency against six major peers, slumped to its low for 2010 on Nov. 4 after the Fed announced its plans to pump more cash into the economy. The gauge has rebounded 1.8 percent to 76.972 since then.
U.S. Treasury Secretary Timothy F. Geithner's failure to push for current-account targets at a finance ministers' meeting in Kyoto, Japan, days before this week's Group of 20 summit may weigh on the U.S. dollar, Citigroup Inc. said.
"We are still optimistic as macroeconomic data are improving and companies are posting good earnings, but if the currency war is not controlled, it could have very negative effects," said Jacques Porta, a Paris-based fund manager at Ofi Patrimoine, who helps oversee about $425 million in stocks. "A weak dollar has negative effects on the price of basic resources."
Earnings Watch
Earnings-per-share have topped estimates at some 76 percent of the 413 companies in the S&P 500 that have announced results since Oct. 7, according to data compiled by Bloomberg. Net income has grown 30 percent for the group as sales increase 9.6 percent.
Alcoa, the biggest U.S. aluminum producer, lost 1 percent to $13.86 in as aluminum, lead, nickel and zinc all declined in London.
Barrick Gold, the world's largest miner of the precious metal, slipped 0.5 percent to $48.98 as gold retreated for the first time in three days.
JDS Uniphase, a maker of fiber-optic equipment, climbed 3.9 percent to $11.85. Chief Executive Officer Tom Waechter told Barron's magazine that broadband capacity demand is "growing faster than any of the carriers can respond to."
Intel climbed 1 percent to $21.46. The stock was raised to "buy" from "neutral" at UBS, which said the personal- computer "component inventory cycle has bottomed."
Amazon.com Inc. gained 0.2 percent to $171.04. The largest Internet retailer is near an agreement to buy Quidsi Inc., the owner of Diapers.com and Soap.com, for $540 million, two people with knowledge of the matter said.
Avon Products Inc. slipped 1.9 percent to $29.20 as Barclays Plc downgraded the stock to "equal weight" from "overweight."
Separately, Avon agreed to sell its 75 percent interest in its Avon Japan business to an affiliate of TPG Capital for a cash payment of 7.3 billion yen ($90 million). The sum includes pre-paid royalties for intellectual property licenses, the company said.