MarketWatch.com - Pre-Market Indications

Monday, February 1, 2010

Indications: U.S. futures rise following difficult January

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By Steve Goldstein, MarketWatch

LONDON (MarketWatch) -- U.S. stock futures rose on Monday as some traders looked past January's struggles to an earnings season that has shown companies beating estimates on both earnings and revenue.

S&P 500 futures rose 4.1 points to 1,074.50 and Nasdaq 100 futures climbed 4.75 points to 1,744.00. Futures on the Dow Jones Industrial Average rose 37 points.

U.S. stocks dropped on Friday to conclude a difficult month in which the Dow Jones Industrial Average dropped 3.5% on a combination of worries about U.S. bank regulation, China monetary policy and Greek financial health.

Bill Gross: What Will Drive the Market In 2010

Bill Gross, founder and co-chief investment officer at Pimco and Barron's Roundtable member, believes the direction of short-term interest rates, inflation and quantitive easing will be the driving market forces in 2010.

Economists have been guarded following data out on Friday showing 5.7% economic growth during the fourth quarter.

"The U.S. economy is headed in the right direction, but it's too early to declare that the recovery is secure," said Andrew McLaughlin, chief economist at the Royal Bank of Scotland, in a note to clients. "Inventories can't form the basis of a durable upturn."

Monday's economic calendar features December personal income, due at 8:30 a.m. Eastern, with the key Institute for Supply Management's manufacturing index for January due at 10 a.m.

Similar manufacturing gauges in the U.K. and euro zone came in stronger than expected.

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The declines in equities have come amid fourth-quarter earnings reports that have again exceeded sell-side estimates -- of the 220 Standard & Poor's 500 members that have reported, 78% have exceeded estimates, according to Thomson Reuters data.

The earnings growth has been led by the technology sector, yet the tech-heavy Nasdaq Composite has retreated the most of the major indexes, down 5.4%.

Ian Scott of Nomura International said markets are focusing more on revenue than earnings.

"Positive revenue surprises on the other hand are increasing, and the market has been much more receptive to these," he said in a note to clients, citing data showing 3.5 times as many companies beat on revenue estimates than missed.

Exxon Mobil /quotes/comstock/13*!xom/quotes/nls/xom (XOM 64.43, -0.53, -0.82%) , the oil giant, headlines Monday's list of firms due to report results.

Toyota Motor /quotes/comstock/13*!tm/quotes/nls/tm (TM 77.00, -0.67, -0.86%) may be active as the Japanese car giant is reported to have a plan to fix 9.5 million vehicles affected by two recalls related to its gas pedals.

Urban Outfitters Inc. /quotes/comstock/15*!urbn/quotes/nls/urbn (URBN 31.57, +1.05, +3.44%) may gain after Standard & Poor's said the retailer will replace Affiliated Computer Services Inc. /quotes/comstock/13*!acs/quotes/nls/acs (ACS 61.52, -0.38, -0.61%) in the S&P 500.

Ryanair Holdings /quotes/comstock/15*!ryaa.y (RYAA.Y 25.98, -0.27, -1.03%) rose in Dublin after the European carrier lifted its fiscal-year earnings outlook.

Markets in Asia were mixed, with the Nikkei 225 up 0.1% while the Shanghai Composite fell 1.6%.

The pan-European Dow Jones Stoxx 600 fell 0.4%. The dollar strengthened against the British pound but lost ground vs. the euro.

Oil futures traded about $73 a barrel.

Steve Goldstein is MarketWatch's London bureau chief.


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