MarketWatch.com - Pre-Market Indications

Thursday, July 22, 2010

Indications: Futures rally on latest earnings, European data

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By Polya Lesova and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock futures rallied Thursday, shedding the previous session's gloom, as investors found reason for cheer in the latest round of earnings, with a rise in weekly jobless claims only denting the momentum.

Stock index futures lightly shaved their strong gains after the government reported that the number of people filing for initial jobless benefits rose 37,000 to 464,000 last week, with the count exceeding expectations. Read more about jobless claims.

S&P 500 futures added 12.00 points to 1,075.90, and Nasdaq 100 futures gained 17 points to 1,832.50. Futures on the Dow Jones Industrial Average surged 98 points to 10,156.

The Dow /quotes/comstock/10w!i:dji/delayed (DJIA 10,330, +210.02, +2.08%) had dropped 109.43 points, or 1.1%, Wednesday, with all but four of its 30 components losing ground.

The losses followed congressional testimony from Federal Reserve Chairman Ben Bernanke, who described the economic outlook as "unusually uncertain."

The market's mood reversed Thursday after data showed that industrial orders in the euro zone rose 3.8% in May from the previous month. Compared to the same month last year, sales surged 22.7%.

PM Report: Bernanke testimony spooks markets

The results exceeded economists' forecasts for flat monthly orders and a 20% year-on-year rise.

The Stoxx Europe 600 index /quotes/comstock/22c!sxxp (ST:SXXP 254.37, +5.13, +2.06%) rose 1.4%, and Germany's blue-chip DAX index gained 1.7%.

"That is the trigger that started this rally. There was a huge surprise to the upside," said Christian Tegllund Blaabjerg, chief equity strategist at Saxo Bank.

"We're at this uptrend year-on-year and that is very positive. There is a time lag when unemployment starts to turn positive again, and that's usually led by new industrial orders," Blaabjerg said.

Adding to positive sentiment, private-sector activity across the euro zone accelerated in July, defying forecasts for a further slowdown in the pace of growth.

The preliminary July Markit composite purchasing managers' index rose to a three-month high of 56.7, up from 56.0 in June. Economists had forecast a decline to 55.2.

Coming data include U.S. existing-home sales and leading economic indicators at 10 a.m. Eastern.

Bernanke's second day of testimony will begin at 9:30 a.m. Eastern.

Caterpillar raises guidance

Traders digested mostly positive second-quarter earnings.

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