Indications: U.S. stock futures gain on economic optimism

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) â€" U.S. stock futures were trading higher Monday as Wall Street headed for a positive start to 2011, helped by investor enthusiasm for equities amid optimism about the outlook for U.S. growth.

Futures for the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,597, +84.00, +0.73%)   rose 84 points, or 0.7%, to 11,597, while those for the S&P 500 index /quotes/comstock/21m!f:sp\h11 (SPH11 1,263, +10.20, +0.81%)   rose 9.9 points, or 0.8%, to 1,262.60. Futures for the Nasdaq 100 index /quotes/comstock/21m!f:nd\h11 (NDH11 2,240, +23.50, +1.06%)   rose 20.5 points, or 0.9%, to 2,236.50.

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Futures were underpinned by stock-market gains in Asia and Europe, with some relief about slowing growth in China’s manufacturing sector, according to data released over the weekend.

Some analysts say this is proof that the Chinese economy peaked in the third quarter of last year, and cooling growth means Beijing won’t need aggressive rate hikes. Read more about China’s economy.

Also driving futures is optimism ahead of Friday’s nonfarm payroll data, which are expected to confirm a picture of growth for the U.S., said Christian Tegllund Blaabjerg, chief equity strategist at Saxo Bank.

“Risk is on, and that’s why you see euro/dollar at $1.3292 and possibly $1.33 before the day ends,” he said. “You’re just leaving safe assets and going into equities. [Payroll data] is the last indicator that needs to be fulfilled, indicating the recovery is strong. ... [O]nce that is firmly confirmed, then you could see equities going up quite a bit.”

Friday’s nonfarm payroll data will cap a busy week of economic reports. On tap for 10 a.m. Eastern time Monday are the ISM manufacturing index for December and construction spending for November.

Economists surveyed by MarketWatch forecast a rise in the ISM index to 57.5%, while construction spending is expected to slip 0.1%.

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On Friday, U.S. stocks finished mixed on the last day of trading for 2010, with the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,578, +7.80, +0.07%)  inching higher, while the Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 2,653, -10.11, -0.38%)  and S&P 500 index /quotes/comstock/21z!i1:in\x (SPX 1,258, -0.24, -0.02%)  both fell slightly.

Among stocks in focus for Monday, Bank of America Corp. /quotes/comstock/13*!bac/quotes/nls/bac (BAC 13.34, +0.06, +0.45%)  said its home loans and insurance unit will record a $2 billion impairment charge after it settled outstanding repurchase claims with Freddie Mac and Fannie Mae over housing loans sold to them by entities related to Countrywide Financial Corp. Bank of America will also take a provision of $3 billion. Read more about Bank of America.

Shares of Borders Group Inc. /quotes/comstock/13*!bgp/quotes/nls/bgp (BGP 0.90, -0.26, -22.40%)  could be in focus, owing to fallout from its decision last week to halt payments to some vendors as it tries to refinance debt.

Jed Lyons, chief executive of Rowman & Littlefield Publishing Group Inc., said in an interview with The Wall Street Journal that his company would temporarily halt book shipments to the chain to help protect clients.

Shares of Boeing Co. /quotes/comstock/13*!ba/quotes/nls/ba (BA 65.26, +0.25, +0.38%)  could be active after Barclays Capital affirmed its overweight rating on the aerospace giant, but cut its 12-month price target to $80 from $87, citing such concerns as a delivery delay for the first model 787.

Shares of Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 593.97, -4.89, -0.82%)  could also be in focus after The Wall Street Journal reported that the Internet search engine is gathering publisher support for a digital newsstand for users of devices that run its Android software. That would be a direct challenge to what Apple Inc. /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 322.56, -1.10, -0.34%)  offers via its iTunes stores.

European markets were higher across the board, with auto and technology stocks leading gains of as much as 2% for the French CAC 40 /quotes/comstock/30t!i:px1 (FR:PX1 3,875, +69.99, +1.84%)   and 1.5% for the German DAX 30 /quotes/comstock/30p!dax (DX:DAX 6,995, +80.56, +1.17%)   index. London markets were closed for a bank holiday.

In Asia, an upbeat global-demand view drove technology and auto stocks. South Korea’s main index surged to an all-time high, while Hong Kong’s Hang Seng index added 1.7%.

The dollar rose 0.3% against the euro to $1.3345 and rose 0.6% against the Japanese yen at ¥81.38.

Crude-oil prices for February delivery added 77 cents to $92.15, while gold futures for February advanced $1 to $1,422.40.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.

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