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Futures Gain on Obama Speech, Boeing Weighs

Stock index futures edged higher Wednesday, hours after President Obama called for a lower corporate tax rate to boost the economy, but a drop in Boeing's profit limited gains.

Stocks trimmed losses in the final hour of trading Tuesdayto end flat amid mixed earnings and economic news.

In the State of the Union address to Congress, Obama asked lawmakers to work with him to cut the corporate tax rate and simplify the tax code, moves that could lead to higher corporate profits.

Davos 2011 - See Complete Coverage
Davos 2011 - See Complete Coverage

Economist Nouriel Roubini was skeptical of the plan to partially freeze defense spending. He told CNBC in Davosthat it would yield no more than "spare change" compared to a budget deficit of more than $1 trillion.

The government will have to work on reform on entitlement programs like Social Security and "also eventually raise taxes for both the rich and the middle class," said Roubini.

A handful of earnings reports were out this morning. Dow component Boeing posted a profit in line with expectations but revenue missed forecasts and the airliner handed in a full-year outlook that also disappointed.

Meanwhile, United Continental posted a wider quarterly net losson expenses tied to last year's merger of UAL and Continental Airlines, but excluding items the company made a profit. Rival US Airways reported quarterly profit against a year-ago loss as the industry extends a recovery from the most recent economic downturn that drained travel demand.

United Technologies reported a 12 percent rise in profit, boosted by strong emerging-market demand for its products and higher profit margins. And Abbott Labs reported better-than-expected results, fueled by strong demand for its prescription medicines and improving demand for medical devices.

Xerox's quarterly profit felldue to restructuring charges and the company announced that its CFO plans to retire next month.

About 70 percent of S&P companies have beaten estimates so far, but worries that inflation could cut into profits have caused investors to jump on shares of companies that only produced spectacular results.

Qualcomm , Netflix and Starbucks are expected to report earnings after-the-bell tonight. (Read More: Is Netflix the Most Overvalued Stock on the Street?)

Yahoo will also be among closely-watched stocks after the search-engine firm gave revenue guidance for the current quarter that was short of forecasts. Analysts appeared to be mixed on the stock: Citigroup raised its target price to $19 from $18 while Goldman Sachs cut their target price to $18 from $19.

Sara Lee shares slipped in pre-market trading after the food manufacturer rejected a buyout offer from a group of private equity firms, saying it was too low, the New York Post reported, citing sources.

Toyota shares slipped in pre-market trading after the Japanese automaker said it would recall about 1.2 million unitsof the Noah minivan and other models in Japan as well as about 140,000 Avensis models overseas to fix faulty fuel pipes and high-pressure fuel pumps.

Wells Fargo upgraded the railroad sector to "overweight" from "market weight," and lifted CSX to "outperform" from "market perform."

Nielsen priced its initial public offering late Tuesday at $23 a share, and the stock will begin trading Wednesday. The TV ratings and consumer research company is seen raising at least $2.2 billion in capital from the IPO. (More on IPO Surge: 18 Companies Will Price in Next Two Weeks)

On the economic front, mortgage applications slumped 12.9 percent last weekas bankers recorded the slowest refinancing activity in more than a year, according to the Mortgage Bankers Association.

New home sales for December are due at 10 a.m. and are expected to have risen to 300,000, according to Briefing.com.

Federal Reserve officials will continue their two-day meeting on Wednesday. In a statement due at 2.15 p.m. they are expected to saythey will press on with their program to buy $600 billion in Treasury securities.

The Treasury is scheduled to auction $35 billion in 5-year notes. Oil inventories are due at 10.30 a.m. ET.

On the Calendar This Week:

WEDNESDAY: New home sales, oil inventories, five-year Treasury note auction, FOMC announcement; Earnings after-the-bell from Qualcomm, Netflix and Starbucks.
THURSDAY: Durable goods, jobless claims, pending home sales, natural gas inventories, seven-year Treasury note auction, money supply; before-the-bell earnings from AT&T, Caterpillar, and Colgate-Palmolive; after-the-bell earnings from Microsoft.
FRIDAY: GDP (first reading), consumer sentiment; NBCU/Comcast deal closes; before-the-bell earnings from Chevron and Honeywell.

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