Market Minute: Gains Expected After Data, Caterpillar Earnings


By Ryan Vlastelica

NEW YORK, Jan 28 (Reuters) - U.S. stock index futures pointed to a modestly higher open on Monday following strong data and results from Caterpillar, though gains were slight after a rally that took the S&P 500 above 1,500 for the first time in more than five years.

A strong start to the earnings season has boosted equities, with major averages rising for four straight weeks. The S&P has gained for eight straight days, its longest winning streak in eight years.

Caterpillar Inc (CAT) rose 2.5 percent to $98 in premarket trading after the Dow component reported adjusted fourth-quarter earnings that beat expectations, though revenue was slightly below forecasts. The heavy machinery maker also said it remained cautious on the economy despite recent improvements.

Caterpillar"You can't find more of a global bellwhether than Cat, and people are pleased with the number, which suggests there could be less concern about slowing growth in China after this," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.

Thomson Reuters data through Friday showed that of the 147 S&P 500 companies that have reported earnings so far, 68 percent exceeded expectations. Since 1994, 62 percent of companies have topped expectations, while the average over the past four quarters stands at 65 percent.

Yahoo Inc (YHOO) reports after the closing bell, and could face heightened expectations following strong results at Google Inc (GOOG) last week.

S&P 500 futures rose 2 points and were about even with fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 22 points and Nasdaq 100 futures rose 2 points.

The S&P 500 closed at its highest since Dec. 10, 2007, and the Dow ended at its highest since Oct. 31, 2007. Over the past four weeks, the S&P has jumped 7.2 percent, suggesting markets may be vulnerable to a pullback if news disappoints.

Durable goods jumped 4.6 percent in December, a pace that far outstriped expectations for a rise of 1.8 percent.

"We continue to have a parade of better-than-expected economic reports. All-in-all it's a good picture. I think there's a good chance we've reached a point of recognition where people don't think the economy will crater," Kaufman said.

In addition to earnings, equities have also risen on an agreement in Washington to extend the government's borrowing power. On Monday, Fitch Ratings said that agreement removed the near-term risk to the country's 'AAA' rating.

Previously, the agency said the lack of an agreement would prompt a review of the sovereign rating.

In company news, Keryx Biopharmaceuticals Inc (KERX) said a late-stage trial of its experimental kidney disease drug met the main study goal of reducing phosphate levels in blood, sending shares up 41 percent to $4.84 in premarket trading.

Bargain hunters may look to Apple Inc (AAPL) in the first session after the tech giant lost its coveted title as the largest U.S. company by market capitalization to Exxon Mobil Corp (XOM). On Friday, Apple's market cap fell to $413 billion, down roughly $250 billion from its September peak. Apple's fall is about equal to the entire value of Google.

"Apple is pretty attractive right now, so you may see an opportunity here," said Chris Bertelsen, who helps oversee $1.5 billion as chief investment officer of Global Financial Private Capital in Sarasota, Florida. "Those who think the stock is dead have made a big mistake."

U.S. stocks rose on Friday, lifted by strong results from such companies as Procter & Gamble (PG). The rise put the S&P 500 about 4.1 percent away from its all-time closing high of 1,565.15 on Oct. 9, 2007. (Editing by W Simon and Kenneth Barry)


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beemerboxer

How on earth did this happen under a left wing socialist , pinko President? The Market has improved by 67 percent since President Obama inherited a crumbling economy from the Republicans, (who have suddenly become fiscally prudent if only for expediency). Unemployment is down and holy cow, the economy is improving. And meanwhile, we see the Republicans crawling slowly leftwards as they try and repair their tattered image. Perhaps they need a little "Socialism" to dilute their hard right ideals and wake up to the 21st century?

January 28 2013 at 12:13 PM Report abuse rate up rate down Reply
David

Thank you Mr President for what? Unemployment is still over 14%, food prices are soaring, oil keeps going up, more people that ever are on food stamps, and spending is out of control. There is a big correction coming in the stock market, and for those who own gold will take a major hit! Sorry about the last 7 entries.

January 28 2013 at 12:13 PM Report abuse rate up rate down Reply
David

Do other people have trouble posting comments!

January 28 2013 at 12:08 PM Report abuse rate up rate down Reply
David

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January 28 2013 at 12:07 PM Report abuse rate up rate down Reply
David

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January 28 2013 at 12:06 PM Report abuse rate up rate down Reply
David

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January 28 2013 at 12:06 PM Report abuse rate up rate down Reply
Kevin

Another sign of an economy thats roaring back. Thank you President Obama!!!

January 28 2013 at 9:37 AM Report abuse +1 rate up rate down Reply
1 reply to Kevin's comment
posthuf

The stock market does those invested in it (our multimillionaire politicians, including Congress and the prez) a lot of good, but nary a bit for the working classes.

Or did you miss the reports that D.C. is now the highest paid area in the nation?
That more expensive wine is consumed there every day than in any other area of the nation?
That home prices are higher than any other area of the nation?

And OMG! Lamborghini - the horror of it all. They can't keep Lambos in stock the demand is so high!

It's not a question of how much money is exchanging hands, it's a question of WHOSE hands are exchanging the money. We still have 8% unemployment (average over 8 years of Bush 4.5%), GDP growth rate of only 0.3% (average 8 years of Bush 3.7%), and inflation of 1.7% (average 8 years of Bush 1.3%).

Support obama all you want, but only the rich benefit from him, more specifically, only HIS rich friends benefit. Why do you think there are so many exemptions to obamacare and new tax laws?

January 28 2013 at 11:45 AM Report abuse -1 rate up rate down Reply