Stock market headed for higher open after Apple, Coke turn in strong earningsBy Stephen Bernard, AP
Wednesday, July 21, 2010
Strong earnings from Apple send stock futures up
NEW YORK — Stock futures headed for a higher opening Wednesday after Apple Inc. and Coca-Cola Co. reported stronger financial results, a welcome sign after several other major companies disappointed investors this week.
Apple easily surpassed profit forecasts and, more importantly, raised its revenue outlook above analysts’ expectations when it released results after the market closed Tuesday.
Coke’s results, released early Wednesday, were also higher than forecast. Net income rose 16 percent on higher sales of soft drinks and juices in every part of the world except Europe.
Apple’s stock rose 4.1 percent in pre-opening trading, while Coke’s rose 1.5 percent. Yahoo, which reported disappointing results after the market closed Tuesday, saw its shares slump 6.7 percent before the market opened.
Two major banks also reported stronger earnings. San Francisco-based Wells Fargo & Co. and New York-based Morgan Stanley both earned more than analysts were forecasting. Wells Fargo rose 5.4 percent in pre-opening trading, and Morgan Stanley rose 3.7 percent.
The stronger results were a relief to investors who grew skittish over the past week because of weaker than expected revenues at companies including IBM and Johnson & Johnson. Investors have focused on revenue as companies report their financial results, believing that companies’ sales are a good indicator of how the overall economy is doing. With the second-quarter earnings season now about halfway through, the results have been mixed, sending the stock market swinging erratically over the past week.
Ahead of the opening bell, Dow Jones industrial average futures rose 41, or 0.4 percent, to 10,219. Standard & Poor’s 500 index futures rose 6.7, or 0.6 percent, to 1,086.80. Nasdaq 100 index futures rose 15.75, 0.9 percent, to 1,855.50.
Stocks are coming off two days of gains. The Dow rose Tuesday by more than 75 points after falling nearly 150 early in the morning.
Traders are trying to get a read on the economy through companies’ profit reports, but earnings have been mixed over the past week, which has led to volatile trading. Profit is mostly improving, but sales are not growing fast enough at some companies to reassure investors the recovery is picking up steam.
More certainty about the health of the economy could come from testimony by Federal Reserve Chairman Ben Bernanke. He is scheduled to begin two days of testimony before Congress Wednesday to discuss the Fed’s view on the strength of the economy.
Bernanke is likely to say the economy isn’t headed back into recession, but he is also expected to be cautious about near-term growth. Bernanke will likely repeat a pledge that the Fed will provide any support needed to further boost the recovery.
Bond prices edged lower, an indication that investors are regaining some of their appetite for riskier investments including stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.97 percent from 2.96 percent late Tuesday.
Overseas, Britain’s FTSE 100 rose 1.4 percent, Germany’s DAX index rose 1.2 percent, and France’s CAC-40 gained 1.8 percent. Japan’s Nikkei stock average fell 0.2 percent.
Tags: Earnings, New York, North America, United States