Stock Futures Head to Higher Open

July 23, 2008 6:34:28 AM PDT
Wall Street looked to extend its gains Wednesday after another drop in oil prices blunted reaction to a mixed set of earnings reports. Investors believe the drop in oil, if it lasts, will boost the slumping economy. Crude has retreated nearly $5 a barrel in the past two sessions as Hurricane Dolly looked likely to spare key oil installations in the Gulf of Mexico; the price is now down more than $20 after just weeks ago hitting a record above $147.

In premarket trading, a barrel of light, sweet crude was down $1.63 at $126.80 on the New York Mercantile Exchange.

A drop in energy prices would benefit a wide spectrum of companies, including airlines, manufacturers and even retailers. It also helped distract investors from some disappointing earnings delivered this week - especially from struggling banks and brokerages.

Investors sifted through a raft of earnings news on Wednesday, including a profit warning from warehouse retailer Costco Wholesale Corp. and a big miss by Washington Mutual Inc. However, Dow Jones industrial average components McDonald's Corp., and AT&T Inc. all posted mostly upbeat results.

Dow futures rose 36, or 0.23 percent, to 11,600. On Tuesday, the Dow rose 135 points.

Standard & Poor's 500 index futures rose 6.30, or 0.49 percent, to 1,280.50. Nasdaq 100 index futures added 11.75, or 0.64 percent, to 1,835.75.

Bond prices were lower Wednesday as investors moved more money into equities. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.15 percent from 4.10 percent from late Tuesday.

The dollar was higher against other major currencies, while gold prices fell.

McDonald's said second-quarter profit was driven by strong overseas sales. It easily surpassed Wall Street expectations, driven by strong sales of low-price menu items.

AT&T said quarterly profit rose amid a big spike in wireless subscribers that offset its shrinking landline business. The biggest U.S. phone company is the official carrier of Apple Inc.'s iPhone, and that helped add 1.3 million new wireless subscribers during the period.

Pfizer, the world's biggest drugmaker, said its second-quarter profit more than doubled as restructuring charges declined and the weak dollar helped lift overseas revenue. It narrowly beat Wall Street expectations.

Boeing Co., also a Dow component, said second-quarter earnings fell 19 percent on a previously disclosed charge of $248 million related to a defense program. The world's second-largest commercial airplane maker still was able to beat forecasts.

But Costco said fiscal fourth-quarter and full-year profit will miss Wall Street expectations, as the warehouse club operator expects higher energy costs to hurt its results.

In economic news, the Federal Reserve will also release its beige book, its analysis of regional economies, at 2 p.m. EDT.

Japan's Nikkei stock average rose 0.97 percent. In morning trading, Britain's FTSE 100 added 1.41 percent, Germany's DAX index rose 1.16 percent, and France's CAC-40 rose 1.64 percent.