U.S. Stocks To Open Higher; GM, Inflation Data In Focus
NEW YORK (MarketWatch) -- U.S. stocks are set to open sharply higher Tuesday, with help from benign inflation data and above-forecast earnings from General Motors Corp., as investors await consumer confidence and regional manufacturing reports.
The futures contract for the Dow Jones Industrial Average last was up 91 points at 13,502.
Futures contracts for the S&P 500 and the Nasdaq 100 were 9.7 points higher at 1,490.40 and up 9.8 points at 2003, respectively.
On Monday stocks managed solid gains, casting off the gloom that caused the major averages to register very heavy losses the week before. The market on Monday got a lift from some soothing news in the financial sector, including Citadel Investment Group's agreement to buy troubled loans from Sowood Capital Management.
On Monday investors should train their attention to earnings and economic reports.
"The stock futures are up sharply because we have had some good earnings, especially from General Motors," said Peter Cardillo, chief U.S. economist at Avalon Partners.
"Although earnings have not been the problem" he said, referring to last week's selling which was sparked by worries about subprime lending and setbacks for billions of dollars in bond offerings.
"But good economic numbers today could help us stabilize and we could see some solid gains," he said.
In welcome news for the stock market, the Commerce Department reported that core consumer inflation increased 0.1% for the fourth consecutive month in June, pushing the yearly gain in core inflation down to the lowest level in three years.
The core personal consumption price index rose 1.9% in the past year, the lowest inflation in three years, and just within the Federal Reserve's unofficial comfort zone of 1% to 2% for core inflation. Core inflation excludes volatile food and energy prices.
Signs that inflation is under control take pressure of the Federal Reserve to keep interest rates at higher levels.
There are more reports ahead. At 10 a.m. Eastern the market will view the Chicago purchasing managers report and the consumer confidence survey for this month.
MarketWatch is forecasting an improvement in consumer confidence to 10.60 from 103.9 in June.
Standout stocks
Shares of Dow component General Motors were nearly 6% higher at $34.75 in pre-market electronic trade. The struggling auto maker swung to a quarterly profit from a year-earlier loss, although revenue declined. Both earnings and revenue beat analysts' expectations.
Healthcare giant Johnson & Johnson said it will cut costs in its pharmaceutical segment and stent business as part of a sweeping restructuring plan, and prune 3% to 4% of its global workforce. The company projected restructuring charges in the range of $550 million to $750 million in the second half of the year.
Johnson & Johnson stock was 1.2% higher at $60.81 before the bell.
UBS upgraded telecom operator Verizon Communications to buy from neutral, citing improving fundamentals.
Alcatel-Lucent , the world's largest maker of telecoms equipment, on Tuesday posted a steeper-than-expected second quarter loss on the back of lower sales and merger-related costs.
That stock fell 8.7% to $12.11.
Anadarko Petroleum Corp. was 3.7% higher at $51.95 in premarket action. The company reported sharply above-forecast earnings and revenue, although earnings were below year-earlier levels.
The Food and Drug Administration advised that GlaxoSmithKline plc.'s diabetes drug Avandia should stay on the market with a strong warning about increased risks of heart disease . That stock last was 4.1% higher at $51.45.
Shares of Dow Jones & Co. last were up 8.6% at $56. The Wall Street Journal has reported that the company, which publishes this report, and News Corp. edged closer to a final agreement on the sale of the publisher to the media gianlate Monday.
Dow Jones negotiated on an unusual deal for the company to cover advisory fees for its majority owners, the Bancrofts, in exchange for some holdout family members supporting the deal.
Other markets
Treasury price losses lightened after the benign inflation news. The fixed-income market abhors inflation because it eats into the value of bonds. The benchmark 10-year note last was down 3/32 at 97-17/32 with a yield of 4.819%.
The dollar trimmed some of its gains against the euro and the yen after the inflation report, although market reaction was limited. The dollar was last up 0.08% at 119.21 yen, while the euro was down 0.07% at $1.3711.
Gold futures rose early, extending Monday's gains, boosted by rising oil prices and improved sentiment in the stock market. Gold for August delivery rose $3.90 at $668 an ounce on the New York Mercantile Exchange.
Crude futures were higher too, with the September contract last up 46 cents at $.77.29 a barrel.
By Leslie Wines