- Pre-Market Indications

Thursday, October 7, 2010

Indications: U.S. stock futures rise as claims drop

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By Simon Kennedy and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock-index futures stepped decisively higher Thursday after the government said jobless claims fell last week and the European Central Bank said a stronger dollar is in the U.S. interest.

Futures for the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 10,913, 0.00, 0.00%)  rose 60 points to 10,966 and S&P 500 futures /quotes/comstock/21m!f:sp\z10 (SPZ10 1,157, 0.00, 0.00%)  were up 7 points at 1,162.7.

Futures on the Nasdaq 100 /quotes/comstock/21m!f:nd\z10 (NDZ10 2,014, 0.00, 0.00%)  gained 14 points to 2,018.5.

The moves came after a mixed session for U.S. markets Wednesday, in which the Dow industrials /quotes/comstock/10w!i:dji/delayed (DJIA 10,949, -19.07, -0.17%)  posted a modest gain, while the technology-laden Nasdaq was hit by heavy losses for some software and data-storage stocks.


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The Labor Department reported claims fell by 11,000 last week to 445,000.

“It’s great to see initial claims fall back below 450,000 and hopefully the moderating pace, albeit still too high, of firings will continue,” wrote Peter Boockvar, equity strategist at Miller Tabak, in a note.

The traditional start to earnings season will come after markets close with the announcement of Alcoa Inc.’s /quotes/comstock/13*!aa/quotes/nls/aa (AA 12.20, -0.17, -1.37%)  third-quarter results. The group is expected to post a profit of 7 cents a share.

PepsiCo Inc. /quotes/comstock/13*!pep/quotes/nls/pep (PEP 66.10, -2.01, -2.95%)  reported a 12% rise in fiscal third-quarter profit to $1.92 billion, or $1.19 a share. The company also slightly lowered its outlook for the year, saying earnings per share at constant exchange rates should grow between 11% and 12%, compared to the previous forecast of growth between 11% and 13%.

In Europe, the Bank of England left interest rates unchanged. The European Central Bank also left its key rate unchanged at 1%. At a news conference, ECB President Jean-Claude Trichet said excessive foreign-exchange moves hold negative implications and that he supports the U.S. view that a strong dollar is the interests of the United States. See story on the Bank of England

The euro rose to $1.40 and the Australian dollar hit its highest level against the U.S. currency in more than two decades.

Against the yen, the greenback dropped to ¥82.19, taking the dollar back below levels that caused Japanese authorities to intervene in currency markets last month.

Bad economic news out of Europe in recent days, including another downgrade of Ireland and the need to revise Greek deficit figures higher, has been largely ignored by currency markets, while any signs of weakness in the U.S. have been pounced upon, said economists at DZ Bank in a note to clients.

“Dollar bashing is all the vogue and the bad news out of the U.S. has certainly made it easy for all of those looking for an excuse to sell dollars,” the bank said.

It added that the government will be secretly happy with a weaker currency and that exchange rates will be a major topic of discussion at upcoming World Bank, International Monetary Fund and Group of 20 meetings in Washington.

“The result will, most likely, be more speculation than fact and once the weekend is behind us, the Bank of Japan should once more feel free to act,” DZ Bank said.

The weak dollar helped gold futures set another record, with the December contract trading as high as $1,366 an ounce. Crude-oil futures were modestly higher. See story on Gold’s high

Among other companies in focus, shares of Immucor Inc. /quotes/comstock/15*!blud/quotes/nls/blud (BLUD 16.72, -3.72, -18.20%)  are likely to come under pressure after the biotech firm cut its outlook, citing weak industry demand.

Retailers also released their monthly same-stores sales Thursday. Among the first to announce figures was Stage Stores /quotes/comstock/13*!ssi/quotes/nls/ssi (SSI 12.84, +0.03, +0.23%) , which said same-store sales rose 1.8%, marginally beating the 1.5% consensus forecast.

In international markets, Japan’s Nikkei 225 Average closed down 0.1%, while the German DAX 30 index /quotes/comstock/30p!dax (DX:DAX 6,276, +5.52, +0.09%)  rose 0.2% in intraday trading. See Europe Markets

Simon Kennedy is the City correspondent for MarketWatch in London. Kate Gibson is a reporter for MarketWatch, based in New York.

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