Corporate profits again lift stock futures

[July 14, 2010]  NEW YORK (AP) -- Investors are ready to send the market higher again after a fresh round of upbeat earnings provided hope that an economic rebound will pick up. Stock futures rose Wednesday.

It was chipmaker Intel Corp.'s turn to wow investors with strong earnings and a positive outlook for growth, a day after Alcoa Inc. and CSX Corp. did the same.

The Dow Jones industrial average is set to extend its six-day winning streak. An upbeat report on June retail sales due out later Wednesday could provide an additional boost to the surging market. However, the report is expected to show a slight drop in monthly sales.

Intel reported its biggest quarterly profit in a decade as large corporations started buying new computers for employees. Companies have been stingy in upgrading technology during the downturn, so a return of spending could be a sign corporations are ready to start expanding their businesses again and hire new workers.

Intel's profit and outlook, which is higher than analysts' forecasts, are considered good signs for the economy because the chipmaker manufactures 80 percent of the processors that run PCs and has a large global reach.

The Commerce Department is expected to say retail sales fell 0.2 percent in June, according to economists polled by Thomson Reuters. The small drop, while disappointing, would be better than the 1.2 percent fall in sales seen in May.

Retail sales remain a vital component to the economy because shoppers account for the bulk of the nation's economic activity. High unemployment has kept customers out of stores and could hold retailers earnings in check.

Ahead of the opening bell, Dow Jones industrial average futures rose 38, or 0.4 percent, to 10,326. Standard & Poor's 500 index futures rose 4.60, or 0.4 percent, to 1,094.30, while Nasdaq 100 index futures rose 16.00, or 0.9 percent, to 1,858.50.

The Dow rose 147 points Tuesday after aluminum producer Alcoa and railroad company CSX both reported better-than-expected profit. The pair also provided optimistic outlooks for the rest of the year.

The Dow is up nearly 7 percent during its current six-day winning streak, its best stretch since last July. The recent run-up has erased nearly all the Dow's losses for the year.

Stocks had been mired in a slump in May and June as economic reports piled up showing the economy was not growing as fast as hoped. Rising debt problems in some European countries also added to the market turbulence.

However, early earnings reports have demonstrated that slow economic growth is not dampening corporate profits. Investors' concerns about a further slowdown later in the year have not been shared by companies so far, which have largely provided upbeat outlooks for future quarters. That reassurance has helped to combat the string of disappointing economic reports that came out in recent months.

Meanwhile, bond prices rose Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.11 percent from 3.13 percent late Tuesday.

Overseas, Britain's FTSE 100 fell 0.5 percent, Germany's DAX index dropped less than 0.1 percent, and France's CAC-40 fell 0.6 percent. Japan's Nikkei stock average jumped 2.7 percent.

[Associated Press; By STEPHEN BERNARD]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.