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Stock futures rise on hopes for economy – Wall Street

This article was posted on Jul 15, 2009 and is filed under Press Releases

NEW YORK (AP) — Investors who have been looking for signs the economy is on the mend are pushing stock futures higher Wednesday in the wake of better-than-expected earnings reports from Intel and Goldman Sachs.

The upward move ahead of the market opening in New York followed gains in overseas markets.

Chipmaker Intel Corp.’s strong report after the market closed Tuesday lifted investor confidence. Intel’s sales figures suggest consumers are purchasing computers at a faster rate than anticipated, a potential sign the economy is recovering.

Consumer spending accounts for more than two-thirds of economic activity. Increased spending by consumers is widely seen as a key to an economic recovery.

Just as important as quarterly results, Intel’s third-quarter sales prediction was bigger than analysts’ forecast, a further indication that the chipmaker believes the personal computer market has bottomed and a recovery is under way.

Intel’s upbeat report followed strong earnings earlier Tuesday from Goldman Sachs Group Inc. Goldman kicked off earnings in the banking sector by easily topping analysts’ earnings predictions. The Wall Street banking giant said it earned $2.72 billion, after paying preferred dividends, only two quarters after posting a steep loss during the peak of the credit crisis.

Investors will now set their sights on three other major banks — JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. — reporting second-quarter results later in the week to see if the broader sector is actually recovering from the malaise that beset the sector late last year.

JPMorgan Chase, Bank of America and Citigroup all have strong retail banking operations, unlike Goldman, that could pose problems as loan defaults continue to rise. Moderation in loan defaults could be a sign the economy is strengthening as customers are better able to repay loans.

Ahead of the opening bell, Dow Jones industrial average futures rose 69, or 0.8 percent, to 8,373. Standard & Poor’s 500 index futures rose 8.60, or 1 percent, to 910.00, while Nasdaq 100 index futures increased 22.75, or 1.6 percent, to 1,469.50.

Investors will get a fresh round of earnings reports to review Wednesday, including American Airlines parent AMR Corp. and pharmaceutical firm Abbott Laboratories.

Also on Wednesday, two economic reports will provide additional insight into the state of the economy.

The Labor Department is expected to say consumer prices rose 0.6 percent in June after a 0.1 percent gain in May. The Consumer Price Index, which measures the cost to consumers of buying goods, is a key measure of inflation.

The report is due out at 8:30 a.m. EDT.

On Tuesday, the Labor Department said the Producer Price Index, which measures how much wholesalers pay, increased 1.8 percent in June, double economists’ expectations.

A report on industrial production is likely to show that the output of the nation’s factories, mines and utilities dropped 0.6 percent last month. That decline would be smaller than the 1.1 percent decline seen in May.

The Federal Reserve is due to release the report at 9:15 a.m. EDT.

As investors head back into stocks, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.489 percent, from 3.47 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.18 percent from 0.17 percent late Tuesday.

The dollar fell against other major currencies, while gold prices rose.

Overseas, Japan’s Nikkei stock average rose 0.1 percent. In afternoon trading, Britain’s FTSE 100 gained 1.6 percent, Germany’s DAX index rose 1.8 percent, and France’s CAC-40 gained 1.6 percent.

source: yahoo finance

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