RTTNews - U.S. stocks are set to open on a positive note Monday morning, as better-than-expected corporate results fortified expectations of a second-half recovery. Reports that lender CIT Group may avoid bankruptcy filing with the assistance of lenders are likely to remove an overhang over seeing another financial firm going under. Additionally, traders have to contend with another batch of earnings and their implication for growth.
As of 6.15 am ET, the Dow Futures were up 61 points, the S&P Futures were up 7.30 points, and the Nasdaq 100 futures were up 9.75 points.
Friday, stocks ended mixed amid choppy trading as traders digested better-than-expected quarterly results with cautious optimism. Cost-cutting measures are helping the markets to meet or beat profit goals, while most companies are reporting revenues below expectations- a clear sign of weak demand in the economy.
A report from the U.S. Commerce Department showed that housing starts rose 3.6% to an annual rate of 582,000 units in June from a revised pace of 562,000 units in the previous month. Economists were expecting the figure to remain relatively stable with the pace of 532,000 units originally reported for May. The report also showed that building permits, an indicator of future housing demand, climbed 8.7% to an annual pace of 563,000 from the revised May rate of 518,000.
The Dow finished up by 32.12 points or 0.4% at 8,744, and the Nasdaq rose by 1.58 points or 0.1% to 1,887. However, the S&P 500 slipped by 0.36 points to 940.38.
On the economic front, the Conference Board is scheduled to release a report on the U.S. leading index for June at 10 AM ET on Monday. The consensus estimate calls for a 0.5% increase in the leading indicators index for the month.
Atlanta Federal Reserve Bank President Dennis Lockhart is due to deliver a speech on economic outlook in Nashville, Tennessee to the Rotary Club of Nashville at 1:30 PM ET.
As the earnings season gathers further momentum, traders will focus on the results and the future outlook to gauge the strength of demand in the economy.
Power management company Eaton Corporation (ETN) is slated to release its second quarter results before the market opens for trading. Analysts expect the company to report earnings of $0.17 for the quarter.
Oilfield services provider Halliburton (HAL) will release results for the second quarter of 2009 before the market opens for trading. Analysts expect the company to report earnings of $0.27 per share for the quarter.
M&T Bank Corp. (MTB) will be reporting its second quarter numbers before the market opens for trading. Analysts expect the company to report earnings of $0.48 per share for the quarter.
Texas Instruments (TXN), Boston Scientific Corporation (BSX), and Legg Mason (LM) are among the important companies slated to report their quarterly results after the markets close for trading.
Light sweet crude oil for August delivery is currently trading at $64.62, up $1.06 from its previous close in New York at $63.56 on Friday. Following the return of risk appetite in the global markets, the dollar is weakening against the Euro and the Pound, while it is strengthening against the Japanese Yen.
The European markets are trading in positive territory led banks following news that lender CIT Group managed to avoid bankruptcy following a $3 billion deal. The CAC-40 Index in France is gaining 1.81%, the DAX index in Germany is up 1.62% and the FTSE Index in the UK is up 1.58%
Ernst & Young ITEM Club, in its latest economic outlook, revealed that the British economy is expected to record the biggest single year contraction since 1945. The think tank is forecasting the economy to shrink 4.4% in 2009, worse than the 3.5% decline predicted in April. The group sees recovery in 2010 with a 0.5% growth. In another development, a survey conducted by property website Rightmove revealed that House prices rose 0.6% in July compared to a 0.4% fall in June in the U.K as buyer activity remained strong on rising confidence that the market has passed the bottom.
On the economic front, the Federal Statistical Office or Destatis revealed that German producer prices continued to drop for the fourth month in June. The producer price index or PPI fell 4.6% year-on-year in June, the fastest fall since December 1968, when producer prices dropped 5%. Economists had expected the PPI to fall 4.2% in June.
Most of the Asian markets open for trading ended in positive territory on optimism that the worst for the global economy is over and can start recovering from the later part of this year. The markets in Japan and Indonesia were, however, closed for holiday.
Among the economic news in Asian region, a report from the Australian Bureau of Statistics revealed that producer prices dropped further in the second quarter, to record the steepest fall since the series first began in the fourth quarter of 1998. Producer prices fell 0.8% sequentially in the second quarter, faster than a 0.4% drop in the first quarter, and above economists' expectations of a 0.2% decline.
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