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Futures Higher as Late Surge Spills Over

CNBC.com
Wednesday, 26 May 2010 | 8:03 AM ET

Stock-index futures pointed to a positive open on Wednesday, with global stocks rallying on Tuesday late-session rally on Wall Street.

The last trickles from earnings season helped boost sentiment, as homebuilder Toll Brothers reported earnings of 24 cents per share that beat expectations and lifted shares nearly 4 percent in premarket trading.

The dollar reversed its higher course, falling a bit against a basket of foreign currencies, though the euro continued to weaken against the greenback.

But the 3-month Libor rate stretched its streak of gains to 12 days, edging higher to 0.5378.

Futures briefly added to gains on a mixed bag of durable goods news. The headline number was up 2.9 percent, but orders for long-lasting goods actually slipped 1 percent after stripping out transportation.

Dow component Boeing shares gained about 2 percent premarket after Morgan Stanley upgraded the company to equal weight from underweight. Transportation orders accounted for the bulk of the durable goods gains.

United Health shares also were indicated higher after the company said it was increasing its dividend and moving to a quarterly cycle, with the first being a 12.5-cent payout coming June 21. Shares were last up 1.5 percent premarket.

Asian stock markets rebounded Wednesday. The Nikkei closed 0.7 percent higher, but gains were limited by fears that the euro zone's debt crisis could undermine the global recovery.

Despite continuing nervousness about the European fiscal situation, the OECD announced that a return to recession is unlikely in the euro zone, and a weaker euro should counteract the EU’s austerity tactics. The euro remained under pressure, edging down toward a four-year low against the dollar.

On Wednesday, Italy announced it was implementing budget cuts of 24 billion euros that largely focus on public workers and local governments.

U.S. Treasury Secretary Timothy Geithner flew to Europe after his China trade discussions to discuss concerns about the stability of the European banking system.

His first stop will be in London where he will meet with new UK Chancellor of the Exchequer George Osborne and Bank of England Governor Mervyn King, then he will travel on to the continent to meet European Central Bank president Jean-Claude Trichet.

Geithner is pushing for political unity to solve the debt crisis, amid speculation that the recent 750 billion euro ($922 billion) International Monetary Fund/EU rescue package will not be enough to prevent a liquidity crisis and the collapse of the euro.

Commodities prices were higher, with gold up to $1,207 per ounce, and oil above $70. The German 10-year Bund yield rose slightly to 3 percent as prices fell.

Also on the economic calendar, April’s new home sales are due at 10 am, with analysts expecting an annual rate of 425,000 up from 411,000 the month prior.

At 10:30 am, crude inventories will be announced, and the Treasury will auction 40 billion 5-year T-bills after 1 pm NYT.

The corporate earnings calendar is light American Eagle and Semtech also scheduled to announce their latest financial results.

Technology company Tivo reported its fifth consecutive quarterly loss Tuesday as the pace at which it added subscribers slowed.

  Price   Change %Change
AEO
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SMTC
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TIVO
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TOL
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UNH
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BA
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