US stock futures higher as earnings loom

[October 12, 2009]  NEW YORK (AP) -- The stock market is looking to extend its recent gains at the start of a busy week of earnings.

U.S. stock futures rose early Monday, getting a boost from European markets, which jumped after Royal Philips Electronics issued a better-than-expected profit report. Europe's biggest consumer electronics company earned $256 million in the third quarter. The news helped push Britain's leading stock index to its highest level in more than a year.

Trading on Monday is expected to be fairly light as much of the country observes the Columbus Day holiday. No major economic reports are scheduled and bond markets are closed.

A flurry of earnings reports, including ones from the nation's largest banks, will occupy the market's attention the rest of this week. JPMorgan Chase & Co. reports on Wednesday, followed by Goldman Sachs Group Inc., Citigroup Inc. and Bank of America Corp. A number of major technology firms, including Intel Corp., Google Inc. and International Business Machines, will also report results this week.

At banks, investors are hoping to see signs that consumer loan defaults, including mortgages, are starting to level off, and will be looking for any potential trouble with commercial real estate loans. Overall, the market wants to see evidence that an economic recovery is in full swing.

Earnings season got off to a good start last week when aluminum maker Alcoa Inc. reported a surprise profit. That helped lift the Dow Jones industrial average to its highest level in a year, giving the index a 4 percent gain for the week, its best weekly performance since July. The Dow now stands just 136 points away from the 10,000 mark, a level it has not seen since October 2008.

Ahead of the market's open, Dow Jones industrial average futures rose 41, or 0.4 percent, to 9,848. Standard & Poor's 500 index futures gained 6.00, or 0.6 percent, to 1,074.10, while Nasdaq 100 index futures rose 8.50, or 0.5 percent, to 1,734.

In afternoon trading, Britain's FTSE 100 rose 1.3 percent, Germany's DAX index jumped 1.5 percent, and France's CAC-40 was up 1.3 percent. Earlier Monday, Hong Kong's Hang Seng finished down 0.9 percent. Japan's market was closed for a holiday.

Better-than-expected first-quarter results from banks set off a stock market rally in March, and even stronger second-quarter results helped fortify the rally in July. The S&P 500 index has risen 58.4 percent over the past seven months.

Analysts say companies' earnings reports will determine where the market heads next. If results exceed expectations and show companies are making money through sales and not just cost cutting, stocks could continue their push higher.

"There's still room here for equities to move up on the back of better-than-expected results," said Craig Peckham, an analyst at Jefferies & Co. "I don't think that positive surprises are fully priced in."

But disappointing earnings could easily upset investors who are looking for reassurance that the economy is growing and lead them to sell stocks.

In other trading Monday, the dollar mostly fell against other major currencies, helping to drive commodity prices higher. A weak dollar makes commodities more attractive to foreign investors. Gold was up about $6 at $1,054 an ounce, while oil prices added $1.23 to $73 a barrel in electronic trading on the New York Mercantile Exchange.

The dollar has fallen steadily since March, as investors, more upbeat on the economy, take money out of traditional safe-haven assets and put it to work in stocks. The ICE Futures U.S. dollar index, which tracks the dollar against other major currencies, is down 14 percent since the start of the market's rally.

[Associated Press; By SARA LEPRO]

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