MarketWatch.com - Pre-Market Indications

Wednesday, October 20, 2010

Indications: U.S. futures edge up as Boeing, others report

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By Barbara Kollmeyer and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures tilted higher Wednesday, recovering from the prior session’s drubbing as earnings rolled in from Boeing Co., Morgan Stanley and other key companies.

Also boosting the equities market is the thinking that another round of quantitative easing is coming along with November elections, which are expected to bring “gridlock to Washington,” said John Brady, senior vice president at MF Global in Chicago.

Futures for the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 11,100, +157.00, +1.43%)  rose 19 points to 10,962, while those for the S&P 500 /quotes/comstock/21m!f:sp\z10 (SPZ10 1,177, +12.70, +1.09%)  gained 2.9 points to 1,166.70. Futures for the Nasdaq 100 /quotes/comstock/21m!f:nd\z10 (NDZ10 2,086, +18.50, +0.89%)  added 7 points to 2,074.5.

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“Right now, we’re going to have a market trying to rebound a bit from yesterday’s garden-variety pullback after a 13% updraft since the beginning of September,” said Art Hogan, chief market strategist at Jefferies & Co.

On Tuesday, the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,136, +156.93, +1.43%)  lost 165.07 points, or 1.5%, to 10,978.62, the worst drop since early August, as investors reeled from a surprise rate hike from China and fears that Bank of America Corp. /quotes/comstock/13*!bac/quotes/nls/bac (BAC 11.77, -0.04, -0.30%)  may have to repurchase bad mortgages.

The S&P 500 /quotes/comstock/21z!i1:in\x (SPX 1,181, +14.88, +1.28%)  fell 1.6%, and the Nasdaq Composite /quotes/comstock/10y!i:comp (COMP 2,465, +27.60, +1.13%)  lost 1.8% as markets also took a negative view on reports from Apple Inc. /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 312.37, +2.88, +0.93%)  and International Business Machines Corp. /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 139.44, +1.41, +1.02%) .

“The mortgage-valuation and foreclosure issue remains a serious problem, though analysts believe the problem is hundreds of millions of dollars as opposed to billions of dollars in terms of litigious action,” said David Buik, strategist at BCG Partners. See story on Bank of America.

Analysts said markets may have overreacted to Tuesday’s unexpected news that China lifted its benchmark deposit and lending rates.

Earnings were in the spotlight for Wednesday. Boeing /quotes/comstock/13*!ba/quotes/nls/ba (BA 71.90, +2.85, +4.13%) /quotes/comstock/13*!ba/quotes/nls/ba (BA 71.90, +2.85, +4.13%) shares rose in premarket trade after the aerospace giant said it swung to a quarterly profit from a year-ago loss and lifted its outlook.

Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 25.28, -0.11, -0.43%) /quotes/comstock/13*!ms/quotes/nls/ms (MS 25.28, -0.11, -0.43%) shares fell in premarket trade after the investment bank released its third-quarter results. /quotes/comstock/13*!ms/quotes/nls/ms (MS 25.28, -0.11, -0.43%)

Abbott Laboratories /quotes/comstock/13*!abt/quotes/nls/abt (ABT 52.14, -0.73, -1.38%)  said its third-quarter profit fell 40%, but raised the low end of its 2010 adjusted earnings forecast.

After the market close, eBay Inc. /quotes/comstock/15*!ebay/quotes/nls/ebay (EBAY 25.65, +0.12, +0.47%)  is due to report.

Shares of Yahoo Inc. /quotes/comstock/15*!yhoo/quotes/nls/yhoo (YHOO 15.96, +0.47, +3.04%)  could be in focus after the company reported a surge in profits, but flat net sales. Earnings of 13 cents a share fell shy of expectations of 15 cents a share from analysts polled by FactSet Research. See Yahoo earnings story

Gary Jenkins, head of fixed-income research at Evolution Securities, pointed out in a note that of 56 companies that have reported, 47 have come in ahead of expectations, or 83% in percentage terms, against 75% in the second quarter.

“The revenue beat isn’t so positive, however, with only 45% of companies reporting revenue ahead of consensus,” he said, adding that the market still has to get through another 77 this week.

Shares of Sanofi-Aventis /quotes/comstock/13*!sny/quotes/nls/sny (SNY 34.77, +0.58, +1.70%)   /quotes/comstock/24s!e:san (FR:SAN 49.90, 0.00, 0.00%)  could be active on news that U.S. antitrust regulators have given the green light for its proposed acquisition of Genzyme Corp. /quotes/comstock/15*!genz/quotes/nls/genz (GENZ 72.12, +0.23, +0.32%) .

On the economic calendar, the Fed Beige Book for October will be released at 2 p.m. Eastern time. Speeches are also expected from Charles Plosser, president of the Federal Reserve Bank of Philadelphia, and Jeffrey Lacker, president of the Federal Reserve Bank of Richmond.

In Europe, stocks were largely higher as markets absorbed a handful of earnings. Gains were led by German chemicals giant BASF /quotes/comstock/11e!fbas (DE:BAS 51.98, +1.45, +2.87%) , which rose after the company lifted its outlook. See Europe Markets

The FTSE 100 index /quotes/comstock/23i!i:ukx (UK:UKX 5,729, +25.04, +0.44%)  was slightly higher as the government revealed details of its spending review, saying it would stick to the spending timetable set out in its emergency budget in June.

After a sharp selloff Tuesday, December gold futures were lately up $1.8 to $1,337.80 an ounce, while November crude-oil futures gained 41 cents to $79.9 a barrel.

The euro was up nearly 1% against the dollar at $1.3839.

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

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