MarketWatch.com - Pre-Market Indications

Monday, October 11, 2010

Indications: Stock futures gain as earnings reports loom

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By Barbara Kollmeyer and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures pointed mildly higher Monday as investors geared up for an important earnings week and looked to extend last week’s gains, which pushed the Dow Jones Industrial Average above 11,000.

“This is an important kickoff week for earnings, and it is cast against a bullish technical background,” Marc Pado, U.S. market strategist at Cantor Fitzgerald, wrote in a note.

Futures for the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 10,967, 0.00, 0.00%)  rose 17 points to 10,964, while those for the S&P 500 /quotes/comstock/21m!f:sp\z10 (SPZ10 1,162, -0.50, -0.04%)  gained 2 points to 1,162.6

Futures for the Nasdaq 100 /quotes/comstock/21m!f:nd\z10 (NDZ10 2,025, -0.25, -0.01%)  added 3.75 points to 2,024.5.

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Looking to up the ante in the wireless market, Microsoft Corp. /quotes/comstock/15*!msft/quotes/nls/msft (MSFT 24.59, +0.02, +0.08%)   is expected to release a new line of Windows Phone 7 smart phones.

The phones, which will initially be available only on AT&T Inc.’s /quotes/comstock/13*!t/quotes/nls/t (T 28.32, +0.10, +0.35%)  network, are intended to compete against Apple Inc.’s /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 295.36, +1.29, +0.44%)   iPhone and Google Inc.’s /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 538.84, +2.49, +0.46%)   Android system.

Bond markets and federal offices in the U.S. are closed Monday for the Columbus Day holiday. No economic data are due for release.

Stocks rose Friday after disappointing nonfarm-payrolls data put the possibility of debt-buying by the Federal Reserve back in the spotlight. The Dow industrials /quotes/comstock/10w!i:dji/delayed (DJIA 11,010, +3.86, +0.04%)  finished just above 11,000 Friday, the first close above that level since May 3. It gained 1.6% on the week.

The S&P 500 /quotes/comstock/21z!i1:in\x (SPX 1,165, +0.17, +0.01%)  rose 1.7% last week, and the Nasdaq 100 /quotes/comstock/10y!i:comp (COMP 2,402, +0.42, +0.02%)  added 1.3%.

“The market is in a very bullish mood,” said Christian Tegllund Blaabjerg, chief equity strategist at Saxo Bank in Denmark. For the next two weeks, and until markets know for sure when and how the Fed will pump more cash into the economy, earnings will take precedence, he said.

Although no significant earnings are slated for Monday, Tuesday kicks off with chip manufacturer Intel Corp. /quotes/comstock/15*!intc/quotes/nls/intc (INTC 19.56, +0.04, +0.20%) , and Wednesday features J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 39.73, +0.42, +1.07%) . Google reports Thursday, and General Electric Co. /quotes/comstock/13*!ge/quotes/nls/ge (GE 16.96, -0.16, -0.93%)  will announce results Friday.

On the basis of those four companies’ reports, this week is “going to be massively important,” said Blaabjerg. “On Friday, when we go home for the weekend, we’ll be a lot more enlightened on what we should expect from 2011.”

Awaiting results from tech giants

Fall earnings reports will soon kick into high gear, says MarketWatch's Rex Crum. Intel sets the pace for the tech sector.

He expects a very strong earnings season. “The benchmark for an average earnings season is two-thirds of the companies surprising to the upside. This season, we’re going to see 70% surprising on the upside,” he said. He sees the S&P 500 index hitting 1,170 by the end of this week and 1,200 by the end of earnings season, provided earnings are strong.

In Europe, markets saw broad-based gains, with financial stocks higher and autos also gaining on hopes of further stimulus by central banks. In Asia, resource stocks led Chinese markets higher, while miners lifted Australian stocks to a five-month high.

December gold futures fell $2 to $1,343.3 an ounce, while crude-oil futures slipped 11 cents to $82.55 a barrel.

The dollar was flat against the euro at $1.394, but touched a 15-year low against the yen Monday at ¥81.40 before recovering.

The issue of countries using currencies as a policy weapon was a hot topic of discussion over the weekend during the International Monetary Fund meeting in Washington, which was attended by central bankers and finance ministers.

The IMF’s governing body said the fund should “deepen its role” on currencies, but made no policy resolutions. See IMF moves to referee currency debate.

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Kate Gibson is a reporter for MarketWatch, based in New York.

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