U.S. stocks to climb; April confidence data awaited
Tue April 29, 2003 09:11 AM ET (Adds quotes, details) By Elizabeth Lazarowitz
NEW YORK, April 29 (<a href=reuters.com>Reuters) - Stocks are poised to start Tuesday's session a touch higher as a fresh batch of earnings reports underpins investor hopes that companies have seen their worst, while Wall Street awaits key data on the U.S. consumer.
Expectation-beating first-quarter results from corporate America have fueled a sharp rally in the past seven weeks, and investors were sifting through more earnings from companies, including chemical maker DuPont Co. DD.N , drug maker Bristol-Myers Squibb Co. BMY.N and semiconductor manufacturer Altera Corp. ALTR.O .
"It's a follow-through from yesterday where psychology seemed to change," said James Volk, managing director of equity trading at D.A. Davidson & Co. "People were encouraged that the earnings season is just about behind us and there were no major downside surprises, as well as the perception that the economy really has, if not turned around, bottomed."
As Wall Street looks for signs that the economy is poised for a rebound, the market could take its early cues from the Conference Board's consumer confidence index.
Stocks roared higher on Monday, giving the blue chip Dow Jones industrial average .DJI its biggest gain in about a month, as investors celebrated solid results from McDonald's Corp. MCD.N and Procter & Gamble Co. PG.N
Standard & Poor's 500 stock index futures for June were up 3.30 points at 916.90, while Nasdaq futures for the same month were up 4.50 points at 1,112.
The Conference Board's consumer confidence survey, due at 10 a.m. (1400 GMT), could give investors a look at how the American consumer -- the linchpin of U.S. growth -- is holding up. Many economists expect that, with the resolution of major fighting in Iraq, consumer confidence got a big boost. The index is expected to read 69.8 in April, up from 62.5 in March.
Ahead of the open, the government reported U.S. employment costs in the first quarter of 2003 jumped by the highest margin in nearly 13 years as health insurance and pension plan costs shot higher.
The market is bracing for a barrage of economic data due later this week, including a closely watched gauge of the manufacturing sector and the government's monthly payrolls data.
"This will tell the market what the state of the economy is and it is probably not going to be as good news as earnings has been," said Bill Strazzullo, market strategist with State Street Corp. He said investors may be encouraged to lock in profits after the market's recent rally.
The Standard & Poor's 500 index .SPX , which is nearing three-month highs, is up more than 14 percent since it hit its 2003 lows on March 11.
Weaker oil prices, which soothed worries corporate profits could take a hit from higher energy costs, were also encouraging stock investors.
DuPont, the second-largest U.S. chemical company, on Tuesday returned to a first-quarter profit, as stronger sales offset surging energy and raw material costs, but it warned that second-quarter profits would miss Wall Street forecasts.
U.S. drugmaker Bristol-Myers Squibb reported its quarterly profit fell as competition from cheaper copycat medicines continued to hurt results.
Northrop Grumman Corp. NOC.N , the No. 3 U.S. defense contractor, on Tuesday posted higher quarterly earnings, excluding certain items, largely due to the new businesses recently acquired.
Halliburton Co. HAL.N , the world's No. 2 oilfield services company, on Tuesday said first-quarter earnings rose as North American drilling activity overcame international results hurt by war and political unrest in Venezuela, Nigeria and the Middle East.
Altera, a maker of programmable semiconductors, posted higher first-quarter profit than a year ago, beating Wall Street estimates on strong sales of new products and replenishing inventories that were depleted late last year.
In overseas trading, European stocks rose as corporate results from chemical giant BASF BASF.DE as well as telecom equipment titans Ericsson ERICb.ST and Alcatel CGEP.PA pleased investors.
The FTSE Eurotop 300 index .FTEU3 of pan-European blue chips rose 0.78 percent to 833, while the euro zone DJ Euro Stoxx 50 index .STOXX50E gained 0.8 percent to 2,363.
In Monday's U.S. session, the Dow Jones industrial average .DJI finished up 165.26 points, or 1.99 percent, at 8,471.61, its biggest rally since an advance of 215 points, or 2.6 percent, on April 2. All 30 Dow components ended higher, pushing the blue-chip Dow average back up into the black for the year.
The broader Standard & Poor's 500 Index .SPX rose 16.03 points, or 1.78 percent, to 914.84. The technology-laced Nasdaq Composite Index .IXIC gained 27.70 points, or 1.93 percent, to close at 1,462.24, based on the latest available figures.
(With additional reporting by Doris Frankel)