Futures Extend Gains Thanks to Wells Fargo
US stock index futures rose ahead of the open Thursday as Wells Fargo surprised investors by pre-announcing its forecast-beating earnings results.
Wells Fargo now sees first-quarter earnings per share of 55 cents, including items, which is far higher that previous estimates of 26 cents a share. The news sent shares of the financial services company soaring more 20 percent in pre-market trading.
But there were mixed results for Dow component Wal-Mart Stores .
Wal-Mart’s same-store sales rose 1.4 percent in March, excluding fuel costs, which was lower than the 3.2 percent predicted. But the company expects comparable sales for the 13 weeks ending May 1 to be "around the high end" of its forecast of a 1 percent to 3 percent rise.
It also predicted earnings will be "toward the high end" of its February guidance of 72 cents a share to 77 cents a share. Wal-Mart shares fell 5 percent in before-hours trading.
Chain-store operator Costco posted worse-than-expected comparable March sales. Investors are hoping to see signs of improvement from the beleaguered retail market that has been hit hard as consumers retreat from spending.
Stocks eked out a slight gain in the previous session, with technology stocks leading the way, as speculation mounted that the government would extend TARP funds to insurers as well as banks.
Banking shares were mostly higher premarket Thursday following a New York Times report that the nation's largest financial institutions will probably pass their government stress tests, but could still need bailout money.
Citigroup was up 4 percent and Bank of America gained 2.5 percent.
Asian stocks ended their trading week with strong gains across the board, with technology shares leading the rally. The positive sentiment continued into European trading.
Also in Asia, Japan’s much anticipated stimulus package was unveiled to the tune of $154 billion, or 3.1 percent of the country’s GDP. The bulk of the package is expected to be funded by new government debt.
Meanwhile, the earnings outlook for Morgan Stanley came under question by a report from the Wall Street Journal. The investment bank is expected to suffer a writedown of between $1.2 billion and $1.7 billion on the value of its bonds, the paper said citing people familiar with the matter.
Warren Buffett's Berkshire Hathaway also received a potential blow, but in the form of a ratings downgrade from Moody's. Buffett’s company no longer has the top level of investment grade rating.
On the economic front, Bank of England said it is holding its key lending rate steady as it contemplates more quantitative easing. Export/import prices for March are released at 8:30 am New York time and new unemployment claims for the week ended April 4 are out at the same time. February’s trade balance data is also due at 8:30 am.