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Futures rise after Dell earnings, weaker oil
2008-05-30
Stock index futures rose on Friday, with the market looking set to round out the month on a positive note after stronger-than-expected earnings from computer maker Dell Inc (DELL.O) and as oil prices pulled back further. The Nasdaq looked set to post its third straight month of gains, while the S&P 500 was on pace for its second month of gains. The Dow looked set to end the month in the red. Dell's higher-than-expected quarterly profit was driven by cost cuts and strong demand from consumers and foreign markets, and its shares jumped more than 10 percent before the bell. The price of oil dropped below $126 due to a stronger dollar and after news of a regulatory probe into possible price manipulation added to trader caution. Oil's record-setting run this year has heightened concerns about inflation and consumer spending. Given the concerns about inflation, the core personal consumption expenditure price index could set the tone for the session. The core PCE index, which is the Federal Reserve's preferred measure of inflation, is due at 8:30 a.m. (1230 GMT). Weaker oil helped European stocks gain ground on Friday, while Asian stocks rose, led by exporters in Japan, as fears of a deep U.S. recession receded. "I think what's driving the market here are oil prices declining. Traders are unwinding this energy-commodity trade and beginning to put assets to work in other parts of the market, like technology and financials," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. "Dell's earnings surprise should have a positive effect on the market. Earnings this quarter generally have been better than expected." S&P 500 futures were up 2.6 points, above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 28 points, while Nasdaq 100 futures rose 9 points. In other positive earnings news, jeweler Tiffany & Co (TIF.N) reported a higher-than-expected quarterly profit, boosted by strong sales in international markets, which pushed modest domestic sales to the backseat. Core PCE is forecast to have risen 0.1 percent, slower than the 0.2 percent rate of the previous month. Investors will also get readings on consumer sentiment and business activity in the U.S. Midwest. Wall Street stocks rose on Thursday as a swift drop in oil soothed inflation fears, while an upward revision in a broad measure of U.S. economic growth suggested a recession may be avoided.
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