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Tuesday, July 27, 2010

Indications: Futures rise on strong earnings from DuPont, banks

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By Kate Gibson and Polya Lesova, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock futures extended their gains Tuesday after an index of home prices climbed in May, further bolstering sentiment that came with strong earnings from chemical maker DuPont Co.

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Traders also digested news of a $17.2 billion quarterly loss at oil giant BP PLC /quotes/comstock/13*!bp/quotes/nls/bp (BP 37.96, -0.69, -1.78%) , which also announced the departure of Chief Executive Tony Hayward.

Stock futures furthered their rise after the Case-Shiller home-price index showed that prices were up 1.3% in May.

Futures on the Dow Jones Industrial Average rose 69 points to 10,526. S&P 500 futures gained 8.2 points to 1,117.70, and Nasdaq 100 futures advanced 12 points to 1,899.50.

U.S. stocks ended higher Monday for a third straight session, helping lift the Dow industrials back into positive territory for the year. The Dow /quotes/comstock/10w!i:dji/delayed (DJIA 10,534, +8.10, +0.08%) closed up 100.81 points, or 1%, to 10,525.43.

A string of companies reported quarterly results Tuesday. DuPont /quotes/comstock/13*!dd/quotes/nls/dd (DD 40.52, +1.53, +3.92%) said its second-quarter net income rose to $1.16 billion, or $1.26 a share, from $417 million, or 46 cents a share, in the year-ago period.

The company increased its full-year earnings outlook to reflect strong second-quarter results and the expected continuation of year-over-year gains from higher sales.

Data on July consumer confidence will follow at 10 a.m. Eastern.

BP posts huge quarterly loss

BP /quotes/comstock/13*!bp/quotes/nls/bp (BP 37.96, -0.69, -1.78%) /quotes/comstock/23s!a:bp. (UK:BP. 409.40, -7.55, -1.81%) reported a $17.2 billion quarterly loss and took $32.2 billion in charges linked to its response to the Gulf of Mexico spill. Read more on BP's loss.

The loss compared to a profit of $4.39 billion earned in the year-earlier period. BP also named Robert Dudley as its new chief executive, replacing Tony Hayward, starting in October. Read more on Dudley.

Before the opening bell

Mike Reid and Neal Lipschutz discuss earnings of UBS and other companies, as well as the expectations for Case-Shiller housing data and consumer confidence numbers out later this morning.

Shares of BP gained 0.4% in London trading; they have tumbled 31% over the past three months.

The Stoxx Europe 600 index advanced 0.6%, as banking shares rose after regulators agreed to soften some of their new capital and liquidity rules and to phase in the reforms over several years.

The rules from the Basel Committee on Banking Supervision will impose plenty of new restrictions, but the version agreed upon late Monday includes compromises on some key issues, including what can be counted toward capital. See more on the rules.

The sector was also buoyed by strong earnings reports.

Shares of Swiss bank UBS AG /quotes/comstock/13*!ubs/quotes/nls/ubs (UBS 16.25, +1.10, +7.26%) /quotes/comstock/06p!ubsn (CH:UBSN 17.21, +1.51, +9.62%) rallied after it swung to a second-quarter net profit of 2.01 billion Swiss francs ($1.91 billion) from a loss of CHF1.4 billion a year earlier. Read more on the UBS results.

Germany's Deutsche Bank AG /quotes/comstock/13*!db/quotes/nls/db (DB 68.27, +2.09, +3.16%) /quotes/comstock/11e!fdbk (DE:DBK 52.35, +2.13, +4.24%) reported a 9% rise in second-quarter net profit, even as revenue at its investment-banking division declined. The bank's shares gained 3.9% in Frankfurt. See more on Deutsche Bank.

"Today's gains are being firmly dictated by the strong demand for bank stocks, after UBS posted better-than-expected earnings while Deutsche Bank, whose results were largely in line with expectations, showed loan-loss provisions were decreasing strongly," said Joshua Raymond, market strategist at City Index, in a note.

In the currency markets, the dollar index /quotes/comstock/11j!i:dxy0 (DXY 82.11, +0.02, +0.02%) , which tracks the performance of the greenback against a basket of other major currencies, held at 82.121.

As for commodities, crude-oil futures rose 15 cents to $79.14 a barrel in electronic trading on the New York Mercantile Exchange.

Traders are awaiting inventory data from the American Petroleum Institute, which are expected to show a decline of 2.3 million barrels in crude supplies, according to a Platts survey of analysts.

In Washington, the U.S. Treasury will auction $38 billion in 2-year notes on Tuesday afternoon.

Kate Gibson is a reporter for MarketWatch, based in New York. Polya Lesova is a reporter for MarketWatch, based in Frankfurt.

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