Stock index futures edged higher on Wednesday, hours after U.S. President Barack Obama called for a lower corporate tax rate to boost the economy, but a drop in Boeing's profit limited gains.
In his State of the Union address to Congress Tuesday night, the president asked lawmakers to work with him to cut the corporate tax rate and simplify the tax code, moves that could lead to higher corporate profits.
Obama's comments on taxes and a focus on creating jobs was clearly what the business community wanted to hear, said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York.
About 70 percent of S&P companies have beaten estimates so far, but worries that inflation could cut into profits have caused investors to jump on shares of companies that only produced spectacular results.
I'm feeling good about the earnings season so far, but expectations are so high that beating earnings estimates by a couple of pennies isn't significant enough to make investors excited, Pursche said.
S&P 500 futures rose 5.1 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 31 points, off earlier highs. Nasdaq 100 futures rose 7.5 points.
Investors awaited comments from the Federal Reserve, which is expected to nod to an improving economic outlook as it reaffirms a plan to buy $600 billion in government debt to help speed a recovery. The comments will be released Wednesday afternoon.
Sara Lee Corp
New home sales data for December, expected at 10 a.m. EST (1500 GMT) will be watched for signs of life in the beaten-up sector. They were expected to have risen to 300,000 from 290,000 the month before, a Reuters poll found.
U.S. stocks erased losses in a late flurry of buying to end little changed on Tuesday as overall optimism about earnings offset disappointing results from blue chips 3M Co
(Editing by Jeffrey Benkoe)