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Monday, April 26, 2010

Indications: Stock futures extend gains on Caterpillar results

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By Polya Lesova & Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock futures rose on Monday, with the Dow industrials poised to start with a sixth consecutive session of gains, after heavy-equipment maker Caterpillar Inc. raised its outlook and offered an upbeat view of the economy.

Futures for the Dow Jones Industrial Average rose 24 points to 11,166, while those for the S&P 500 index gained 1.9 points to 1,214.2.

Nasdaq 100 futures were flat at 2,053.

U.S. stocks ended higher on Friday, boosted by a rally in oil prices and data showing an increase in new-home sales. The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 11,204, +69.99, +0.63%) rose 0.6% for the session and gained 1.7% on the week, extending its winning streak to an eighth week, its longest winning stretch since January 2004.

Caterpillar /quotes/comstock/13*!cat/quotes/nls/cat (CAT 68.78, +1.27, +1.88%) reported Monday a first-quarter profit of 36 cents a share, compared with a loss of 19 cents a share in the year-ago period. The firm also raised its 2010 outlook for revenue and profit, and signaled optimism on the economic recovery.

The Treasury Department said Monday it would sell up to 1.5 billion Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 4.86, -0.01, -0.21%) shares, the first round of a plan to divest its entire 7.7 billion share stake in the bank holding company.

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Industry activity and orders are "significantly higher" than last year and are at record levels in some areas, said Caterpillar, which supplies construction equipment, engines and industrial gas turbines.

"Earnings have been surprisingly strong. I am convinced that Caterpillar will decide whether we will open in positive territory in equities," said Christian Tegllund Blaabjerg, chief equity strategist at Saxo Bank, before the earnings were released.

"Caterpillar is an indicator as to how the U.S. economy is doing," he said.

Elsewhere in the corporate sector, Humana Inc. /quotes/comstock/13*!hum/quotes/nls/hum (HUM 45.53, +1.05, +2.36%) and Whirlpool Corp. /quotes/comstock/13*!whr/quotes/nls/whr (WHR 102.22, +1.10, +1.09%) reported increases in first-quarter profit and hiked their full-year earnings outlooks.

Other companies that will release earnings include Boston Scientific Corp. /quotes/comstock/13*!bsx/quotes/nls/bsx (BSX 7.21, 0.00, 0.00%) and RadioShack Corp. /quotes/comstock/13*!rsh/quotes/nls/rsh (RSH 23.17, -0.52, -2.20%) .

In the technology sector, Texas Instruments /quotes/comstock/13*!txn/quotes/nls/txn (TXN 26.67, +0.17, +0.64%) will report earnings after the market closes, while Research in Motion Ltd. /quotes/comstock/15*!rimm/quotes/nls/rimm (RIMM 70.62, -0.78, -1.09%) and Oracle Corp. /quotes/comstock/15*!orcl/quotes/nls/orcl (ORCL 26.48, +0.24, +0.92%) will hold analyst meetings.

The mergers-and-acquisitions sector was active on Monday. Dollar Thrifty Auto Group Inc. /quotes/comstock/13*!dtg/quotes/nls/dtg (DTG 38.85, +0.19, +0.49%) agreed to a cash-and-stock buyout by Hertz Global Holdings Inc. /quotes/comstock/13*!htz/quotes/nls/htz (HTZ 12.88, +0.15, +1.18%) , valuing the company at $41 a share.

Separately, Emerson Electric Co. /quotes/comstock/13*!emr/quotes/nls/emr (EMR 52.74, +0.15, +0.29%) said Monday it has offered to buy U.K.-based Chloride Group PLC /quotes/comstock/23s!e:chld (UK:CHLD 296.00, +87.00, +41.63%) for $1.1 billion.

European equities posted broad gains on Monday, though Greek shares were a notable exception. The main stock index in Athens dropped 2.5% in intraday trading.

In the financial sector, Bank of Ireland /quotes/comstock/13*!ire/quotes/nls/ire (IRE 9.84, -0.20, -1.99%) /quotes/comstock/30b!bir (IE:BIR 1.77, -0.03, -1.67%) announced it will raise 3.42 billion euros ($4.58 billion) to bolster its capital levels.

The euro fell 0.3% to $1.3341, as concerns over Greece's deficit woes weighed on sentiment. German Chancellor Angela Merkel will make a statement on Greece later on Monday, according to media reports.

Greek Finance Minister George Papaconstantinou tried to reassure investors on Sunday, saying his nation wouldn't have to restructure its debt and would never leave the euro zone.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 81.51, +0.04, +0.05%) , which tracks the performance of the greenback against a basket of other major currencies, rose 0.1% to 81.468.

In the commodities sector, oil futures rose 38 cents to $85.5 a barrel, while gold futures edged up $2.5 to $1,156.20 an ounce.

Polya Lesova is reporter for MarketWatch, based in Frankfurt. Kate Gibson is a reporter for MarketWatch, based in New York.


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