MarketWatch.com - Pre-Market Indications

Tuesday, November 2, 2010

Indications: U.S. stock futures gain on Election Day

Stock Assault 2.0 - Artificial Intelligence Stock Market Software

By Simon Kennedy and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures climbed Tuesday as Americans headed to the polls, Oracle Corp. said it would acquire Art Technology Group Inc. for about $1 billion and investors awaited another injection of government funds into the economy.

Barring a surprise in the elections’ outcome, “the only unknown not priced in to the markets is what the exact tax rates for income, dividends and capital gains will be in 2011,” noted Peter Boockvar, equity strategist at Miller Tabak.

QE makes for unstable asset prices

Quantitative easing works by lifting asset prices, making people wealthier and so more inclined to spend. But the wealth effect acts slower than the asset-price boost.

On Capitol Hill, Republicans are expected to take at least partial control of Congress in the wake of Tuesday’s elections, one day before the Federal Open Market Committee, or FOMC, ends a two-day policy meeting, which is anticipated to result in another announced round of economic stimulus, also known as quantitative easing.

“Investors will be waiting for the FOMC statement. Expectations are still for $500 billion, although those looking for more have wavered in light of some better-than-expected economic data,” wrote Marc Pado, U.S. market strategist at Cantor Fitzgerald, in a note.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 11,156, 0.00, 0.00%)  rose 53 points to 11,143, and S&P 500 futures /quotes/comstock/21m!f:sp\z10 (SPZ10 1,193, +0.40, +0.03%)  climbed 6.7 points to 1,189.8.

Nasdaq 100 futures /quotes/comstock/21m!f:nd\z10 (NDZ10 2,152, +1.25, +0.06%)  gained 10.75 points to 2,139.75.

Gold and oil futures also gained, with crude up nearly 1% to $83.65 a barrel on the New York Mercantile Exchange.

On Monday, U.S. stocks closed almost flat after a jittery session, as losses in the financial-services sector wiped out gains elsewhere. The Dow /quotes/comstock/10w!i:dji/delayed (DJIA 11,189, +64.10, +0.58%)  closed up 0.1%, while the Nasdaq Composite /quotes/comstock/10y!i:comp (COMP 2,534, +28.68, +1.14%)  ended down 0.1%.

Oracle /quotes/comstock/15*!orcl/quotes/nls/orcl (ORCL 29.53, +0.40, +1.38%)   said Tuesday that it would pay roughly $1 billion, or $6 a share, to acquire software company Art Technology Group Inc. /quotes/comstock/15*!artg/quotes/nls/artg (ARTG 5.95, +1.85, +45.12%) . Shares of Art Technology soared 46% in premarket trade.

Grain-processing giant Archer Daniels Midland Co. /quotes/comstock/13*!adm/quotes/nls/adm (ADM 31.19, -2.20, -6.59%)   reported a decline in first-quarter net income as rising commodity costs weighed on its performance, which came in below Wall Street’s expectations. Shares of ADM fell about 5% in premarket action. Read more about ADM’s results.

Drug manufacturer Pfizer /quotes/comstock/13*!pfe/quotes/nls/pfe (PFE 17.45, -0.17, -0.96%)   reported third-quarter revenue of more than $16 billion, short of analysts’ estimates, and net income that beat expectations. Read about Pfizer’s results.

Medco Health Solutions Inc. /quotes/comstock/13*!mhs/quotes/nls/mhs (MHS 58.00, +5.63, +10.75%)  reported third-quarter results that exceeded expectations, with shares of the pharmacy-benefits manager rising 2.4% in premarket trade.

Elsewhere on the corporate front, General Motors /quotes/comstock/13*!gm (GM 0.00, 0.00, 0.00%)   is expected to raise $10 billion in an initial public offering as it emerges from a government-financed bankruptcy reorganization, according to a Reuters report. The IPO would cut the government’s holdings in the auto maker to under 50%, and a large portion of the cash would go toward reimbursing the government, people familiar with the matter told the wire service.

BP PLC /quotes/comstock/13*!bp/quotes/nls/bp (BP 41.42, +0.65, +1.59%)   said Tuesday that the costs of the oil spill in the Gulf of Mexico have climbed to $40 billion, but earnings still proved better than expected in the third quarter. Read more about BP’s profit.

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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