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Futures Jump on First Trading Day of 2011

Wall Street looks set to kick off 2011 with some strong gains. Stock index futurespointed to a sharply higher open, with many investors returning to the market following a week that saw volume hampered by a snowstorm in the Northeast and the holiday season.

A drop in inflation in China as measured by the nation's purchasing managers' index may be adding to the upbeat mood, as it would allow the government to stall rate hikes to halt growth.

Asian markets rose broadly, although China, Australia and Japan were closed for holidays. European stocks also gained, but London was closed in observance of the New Year.

Bank of America added to the enthusiasm for the first trading day, as the company said it paid $3 billion to settle claims regarding poorly underwritten mortgages sold to government sponosored entitiesl Fannie Mae and Freddie Mac. BofA shares rose 4 percent in premarket trading.

Shares of Apple fell 0.3 percent before hours. Over the weekend, iPhone users reported a glitchwith the smartphone's alarm.

Shares of AIG could also come under pressure after Barron's reported that the stock could fall this year as the government sells the $70 billion in stock of the insurer that it holds.

Goldman Sachs downgraded semiconductor and semiconductor capital equipment companies to "neutral" from " attractive," saying the stocks have significantly outperformed since 2008. Semiconductor stocks outperformed the S&P 500 by 17 percent, while equipment companies outperformed by 31 percent.

Meanwhile, the semiconductor industry said the year closed at record sales and growth rates, according to Brian Toohey, Semiconductor Industry Association president. Toohey said the industry expects "continued moderation in sales growth."

Dollar General plans to expand across the country, opening 625 new stores and hiring 6,000 workers.

And Facebook raised $500 million from Goldman Sachs and a Russian investor, a deal that values the company at $50 billion, the New York Times reported.

There are no economic indicators out ahead of trading, but at 10 a.m. Institute for Supply Management releases its manufacturing index for December. Economists surveyed by Retuers predict that the index will rise to 56.9 from 56.6 in the previous month.

At the same time the latest numbers on construction spending arrive. Economists are looking for a rise of 0.2 percent for November, down from the 0.7 percent gain in October.

On the Calendar Next Week:

MONDAY: ISM manufacturing index, construction spending.
TUESDAY: Auto sales released, factory orders, FOMC minutes, API weekly report; earnings from Mosaic.
WEDNESDAY: MBA mortgage applications, Challenger job-cut report, ADP employment report, ISM non-manufacturing index, oil inventories; earnings from Family Dollar. Kansas City Federal Reserve President Hoenig speaks.
THURSDAY: Chain store sales, Monster employment index, ECB announcement, jobless claims, natural gas inventories, Treasury STRIPS, money supply; earnings from Monsanto.
FRIDAY: Nonfarm payrolls report, consumer credit; Federal Reserve Chairman Bernanke speaks, Federal Reserve Vice Chairman Janet Yellen speaks.

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