Stocks May Climb Ahead of GDP Report

albena
30 Nov, -0001
New York City

Futures are trading higher Friday ahead of economic data, seen as the main focus of the day. Consumer sentiment, Chicago manufacturing data and the report on 2Q GDP are scheduled for release. Investors are eager to see on whether broad Thursday's gains would lead to much follow-through buying Friday with U.S. commercial petroleum inventories still above normal levels.

U.S. MARKET AVERAGES

Ahead of the release of the advance second-quarter GDP report, the futures continue to sit slightly above the flat line, following broad gains Thursday amid a deluge of corporate earnings, which took the Nasdaq and S&P 500 to new multi-year highs.

Investors continue to digest another slew of positive earnings results from noteworthy companies like Constellation Energy, Baker Hughes, Lloyds, American Electric Power Co. and automaker Volkswagen AG.

Chevron is expected to post earnings before the bell Friday. Analysts forecast per-share earnings of $1.69. Also slated to report Friday are American Electric Power, Anadarko Petroleum and ITT Industries.

Late Thursday, life insurer MetLife Inc. posted second-quarter net income of $2.25 billion, more than doubling its year-earlier earnings, due to gains from the sale of Manhattan office buildings.

ECONOMIC NEWS

The first reading of second-quarter Gross Domestic Product is scheduled to be released before the opening bell Friday. Economists expect GDP to rise by 3.5% in the second quarter, following a 3.8% increase for the first 3 months of the year.

The University of Michigan is due to release its consumer sentiment index at around 9:45 a.m. Economists expect a reading of 96.5, up vs. the final June reading of 96.0, but flat with the preliminary July reading.

Association of Purchasing Management-Chicago is expected to release its regional manufacturing index for July at 10:00 a.m. Economists forecast a reading of 55.0, up versus 53.6 for June.

The Labor Department is due to release its employment cost index at 8:30 a.m. Economist forecast the ECI reading to have jumped by 0.9% in the second quarter versus a 0.7% increase in the prior quarter.

INTERNATIONAL MARKET NEWS

Asian markets closed mostly higher on Friday, as traders focused on earnings, positive economic releases and gains in U.S. equities. Tokyo's Nikkei Average finished at 11,899.60, up 0.4%, by the end of the day, after reaching the 11,900 mark early in the trading session for the first time since March. Sony Corp. and Kyocera Corp. led the decliners after reporting disappointing quarterly results after the closing bell Thursday. Hong Kong's Hang Seng Index closed 0.4% higher at 14,866.75 and Australia's All Ordinaries Index closed up 0.4% at 4,346.70. Seoul's Kospi Index added 0.6% to 1,111.29, and Singapore's Straits Times added 0.2% to end at 2,350.61.

Before the opening bell in Tokyo, the Japanese government reported that the unemployment rate declined to 4.2% in June versus 4.4% in May and industrial output advanced a seasonally adjusted 1.5% in June vs. last month. The Ministry of Economy, Trade and Industry announced spending by households headed by salaried workers increased in the period, and deflationary pressure declined.

European shares climbed to 3-year highs on Friday, helped by continuing rosy earnings flood and gains in oil stocks. The FTSEurofirst index added 0.4% to a new 3-year high, while the FTSE 100 jumped 0.6% to its highest level since March 2002, bolstered by U.S. market gains fueled by strong earnings and lower than expected jobless numbers.

ENERGY, METALS AND CURRENCIES MARKETS

The dollar dipped versus the yen and the euro on Friday as economic data showed Japan's jobless rate dropped to its lowest in seven years and a gain in industrial production. The greenback quoted at 112.15 yen Friday afternoon in Tokyo, down 0.48 yen vs. late Thursday but above the 112.12 yen it bought in New York later that day. The euro climbed to $1.2128 versus $1.2047 late Thursday.

Crude-oil futures settled up nearly a dollar Thursday, as a refinery fire in Louisiana awakened supply concerns that pushed prices above $60 a barrel for the first time in more two weeks. Light, sweet crude oil futures for September dropped below the $60 a barrel level, ending at $59.94, up 83 cents on the New York Mercantile Exchange. Heating-oil futures for August added 2.83 cents at $1.6455 a gallon. Gasoline futures gained 0.62 cent at $1.7220 a gallon. August natural gas climbed 10.2 cents to close at $7.680 a million British thermal units.

August gold settled at $427.40 an ounce, up $2.60. September silver quoted at $7.20 an ounce, adding 16 cents. The September copper contract gained 2.20 cents to $1.6490 per pound, hitting a contract high of $1.6540.

Bond prices edged lower, raising the yield on the 10-year treasury to 4.21% from 4.19% late Thursday.

EARNINGS NEWS

Constellation Energy ((CEG)) reported a second-quarter profit of 66 cents per share, excluding one-time items, up vs. 54 cents per share last year and above the 62 cents per share, seen by analysts. The company backed its target for the full year of $3.35-$3.60 per share.

Baker Hughes ((BHI)) released earnings for the second quarter of 64 cents per share, including a contribution of about 5 cents per share from certain item. This was up versus the 35 cents per share the company earned last year. Analysts had forecasted a profit of 53 cents per share. Quarterly revenues came in at $1.78 billion, up 18% vs. last year's $1.5 billion.

Archer Daniels Midland ((ADM)) is among the other important companies due to release earnings reports Friday. Analysts expect the company to earn 28 cents per share in the quarter, up versus $0.23 per share last year.

Burlington Resources, oil and gas producer, reported 2Q net income rise of $1.40 per share, up from 96 cents per share on revenue of $1.69 billion, exceeding estimates of $1.26 per share.

St. Paul Travelers, property and casualty insurer, posted 2Q profit jump of $1.52 a share compared with a net loss of 42 cents a year ago on higher investment income and good weather. The quarterly results exceeded expectations of $1.13 per share.

Metro One, provider of directory assistance and other telecom services, posted 2Q net loss of 37 cents a share vs. 22 cents in the year-ago period on lower revenue.

Citizens, provider of wireline services in rural areas and small and medium-size cities, posted 2Q net income rise of 13 cents a basic share up from 8 cents in the same period last year, beating estimates by 2 cents.

R&B, supplier of replacement parts and household hardware, posted net income decline to 25 cents a share, down from 29 cents in the year-ago period on thinner profit margins.

Lloyds, British bank, reported first-half pretax profit soared to 1.7 billion pounds, vs. 1.6 billion pounds last year the same period, maintaining the dividend at 10.7 pence and matching analyst expectations.

Printronix, enterprise printing solutions manufacturer, posted 1Q net income fall of 3 cents a share vs. 4 cents a year ago on 4.5% lower revenue.

Priority Healthcare, distributor of specialty pharmaceuticals, posted earnings of 26 cents a share, down from 28 cents a share the year-ago period, slightly missing analyst forecasts of 28 cents a share.

Anadarko, oil and gas producer, posted 2Q net income of $2.12 a share, up from $1.59 a share the year-ago period on revenue growth, in line with analyst expectations.

CORPORATE NEWS

Italian prosecutors are expected to request indictments of several global banks and securities firms, including Citigroup, UBS, Deutsche Bank and Morgan Stanley, for alleged securities-law violations in their dealings with failed Italian dairy company Parmalat.

The investment arm of Goldman Sachs and Allianz of Germany are close to an agreement to buy a 9.9% stake in Industrial & Commercial Bank of China for about $3.5 billion, higher than the $1 billion in earlier reports.