MarketWatch.com - Pre-Market Indications

Wednesday, July 21, 2010

Indications: Futures rise after Morgan Stanley, Apple earnings

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By Polya Lesova, MarketWatch

FRANKFURT (MarketWatch) -- U.S. stock futures gained Wednesday, buoyed by strong results from blue-chip firms including Morgan Stanley and Apple, as investors braced for testimony by Federal Reserve Chairman Ben Bernanke.

Nasdaq 100 futures gained 15.25 points to 1,855 after iPhone maker Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 254.24, +2.35, +0.93%) reported a surge in earnings Tuesday night.

S&P 500 futures added 4.20 points to 1,084.30. Futures on the Dow Jones Industrial Average rose 27 points to 10,205. The Dow /quotes/comstock/10w!i:dji/delayed (DJIA 10,121, -109.43, -1.07%) ended up 0.7% on Tuesday, erasing intraday triple-digit losses.

Sentiment was buoyed by a string of relatively strong earnings results. U.S. investment bank Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 26.80, +1.58, +6.26%) said it swung to a second-quarter profit, as revenue surged.

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Second-quarter net profit at United Technologies Corp. /quotes/comstock/13*!utx/quotes/nls/utx (UTX 67.03, -0.51, -0.76%) rose 14%, and beverage giant Coca-Cola Co. /quotes/comstock/13*!ko/quotes/nls/ko (KO 54.08, +0.84, +1.58%) said its quarterly profit jumped 16%.

Mining giant Freeport-McMoRan Copper & Gold Inc. /quotes/comstock/13*!fcx/quotes/nls/fcx (FCX 66.06, +1.74, +2.71%) also reported increases in quarterly profit and revenue.

Wells Fargo & Co. /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 26.06, +0.15, +0.58%) said its second-quarter net income fell 3%. Shares of the firm rose 5% in premarket trade.

EBay Inc. /quotes/comstock/15*!ebay/quotes/nls/ebay (EBAY 20.17, -0.62, -2.98%) and Starbucks Corp. /quotes/comstock/15*!sbux/quotes/nls/sbux (SBUX 25.17, -0.60, -2.33%) are among the companies reporting after the U.S. stock market closes.

Aside from earnings, the spotlight Wednesday will be on Bernanke's monetary policy report to the U.S. Senate Banking Committee, which starts at 2 p.m. Eastern.

"Investors will be keen to listen to what he has to say after a weak recent bout of economic data could potentially open the door for a more accommodative stance from the Fed," said Nick Serff, market analyst at City Index, in a note to clients.

Strategists at Deutsche Bank said traders will "listen carefully to decipher any hints about the possibility of a U.S. double-dip [recession]."

In Frankfurt, European Central Bank President Jean-Claude Trichet was expected to meet with bank executives. The meeting comes ahead of Friday's release of the results from European bank stress tests.

European shares gain

European shares posted convincing gains, with the Stoxx Europe 600 index /quotes/comstock/22c!sxxp (ST:SXXP 249.24, +2.89, +1.17%) trading up 1.9%.

U.K. household-products company Reckitt Benckiser /quotes/comstock/23s!e:rb. (UK:RB. 3,300, +110.00, +3.45%) agreed to buy SSL International /quotes/comstock/23s!e:ssl (UK:SSL 1,177, +295.00, +33.45%) in a $3.89 billion deal that will add the Durex and Scholl brands to its portfolio. Read more about Reckett Benckiser's deal.

In Milan, shares of Fiat SpA /quotes/comstock/23g!f (IT:F 9.67, -0.03, -0.31%) rallied 6% after the car maker reported a return to second-quarter profit and said it may raise its full-year outlook in the next quarter. Read more on Fiat.

Drug giant GlaxoSmithKline /quotes/comstock/13*!gsk/quotes/nls/gsk (GSK 36.36, -0.01, -0.03%) /quotes/comstock/23s!a:gsk (UK:GSK 1,186, +12.50, +1.07%) posted a second-quarter net loss of 304 million pounds ($464 million), or 6 pence a share, hit by restructuring and legal charges. Sales edged up 4% to £7 billion. Shares of the firm were up 1.1% in London trading.

In the currency markets, the euro /quotes/comstock/21o!x:seurusd (CUR_EURUSD 1.2766, +0.0014, +0.1098%) fell 0.6% to $1.2813.

Meanwhile, the Swiss National Bank said that the sharp rise of the Swiss franc, particularly against the euro, resulted in exchange-rate losses of more than 14 billion Swiss francs ($13.3 billion) in the first half of the year. Read more about the Swiss National Bank.

In electronic trading, September crude-oil futures rose 53 cents to $78.11 a barrel ahead of government data on U.S. petroleum inventories.

Gold futures gained $2.40 to $1,194.10 an ounce.

Polya Lesova is a reporter for MarketWatch, based in Frankfurt.

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