Stock futures modestly higher ahead of GDP report

[January 29, 2010]  NEW YORK (AP) -- Stock futures rose modestly Friday as investors avoid making big bets before the government releases a report on fourth-quarter economic growth.

Upbeat earnings could be provide a modest boost to the market, though profit reports have taken a backseat to politics recently.

Overseas markets were mixed. Asian stocks stumbled on disappointing company forecasts and Toyota's car recall, while Europe's major indexes rose following a report that showed inflation remained relatively benign in the 16 countries that use the euro. Low inflation paves the way for the European Central Bank to keep its key interest rate as a historic low of 1 percent.

Traders are preparing for a preliminary reading that is expected to show the nation's gross domestic product grew at a 4.5 percent annual rate during the final three months of the year. That would mark the fastest pace of growth in nearly four years.

However, much of the growth likely came from areas that might only provide a temporary boost to the economy: government stimulus measures and companies restocking dwindling inventories even as consumer spending hasn't picked up. Investors will want to see signs of more permanent growth to be sure the economy is returning to solid footing.

A strong GDP report could get the market back on track after a 10-month rally came to a screeching halt over the past week. Shares have been falling since hitting a 15-month high last week. The Standard & Poor's 500 index is off 5.7 percent during that time.

Concerns have been mounting that potential new regulations coming out of Washington could upend a fragile economic recovery. President Barack Obama's calls last week to restrict trading by big financial institutions helped spark the sell-off. He has provided scant details about the bank overhaul plan to help alleviate any concerns.

Analysts have been saying for months the market has been climbing too high, too fast. The uncertainty brought on by Washington could finally be giving investors a reason to pull back. The S&P surged 60.3 percent during the 10-month rally.

Ahead of the opening bell, Dow Jones industrial average futures rose 27, or 0.3 percent, to 10,089. Standard & Poor's 500 index futures rose 2.80, or 0.3 percent, to 1,082.00, while Nasdaq 100 index futures rose 2.50, or 0.1 percent, to 1,773.00.

Microsoft Corp. and Amazon.com Inc. both reported better-than-expected earnings after the market closed Thursday. Both companies shares rose in pre-opening trading.

Toymaker Mattel Inc. beat analysts' expectations as well.

Stocks resumed their slide on Thursday. Disappointing forecasts from major technology companies like Qualcomm Inc. added to the recent market concerns. A report from Standard & Poor's saying Britain's banking system is no longer one of the most stable and low-risk also dragged the market lower.

One worry for traders was put to rest Thursday. Federal Reserve chairman Ben Bernanke was reappointed to a second term. Bernanke has championed low interest rates to help spur economic growth, which is also favorable for the market.

Meanwhile, bond prices dipped Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.65 percent from 3.64 percent late Thursday.

The dollar was mixed against other major currencies, while gold prices fell.

Overseas, Japan's Nikkei stock fell 2.1 percent, while Hong Kong's Hang Seng dropped 1.2 percent. Britain's FTSE 100 rose 0.2 percent, Germany's DAX index gained 0.5 percent, and France's CAC-40 climbed 0.6 percent.

[Associated Press; By STEPHEN BERNARD]

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