Stock futures point to rally after signs of European growth; ahead of earnings, economic data

Stock futures rise sharply, point to rebound

NEW YORK — Stocks were set for a strong rebound Thursday after another strong batch of earnings and some encouraging signs of growth in Europe. Futures rose sharply.

Investors are largely writing off a jump in weekly jobless claims that might have been skewed by seasonal factors. Instead they are focused on earnings from a broad range of companies that demonstrate businesses are not seeing a slowdown in the recovery that economic data would otherwise indicate.

European markets rose after a report showed unexpected growth in the 16-nation group that uses the euro. In recent months, investors worldwide have been concerned that mounting government debt in Europe would stall a global recovery. A jump in Europe’s purchasing managers index is welcome relief for those prediction contraction on the continent.

The jump in futures comes a day after investors sold stocks because Federal Reserve Chairman Ben Bernanke warned Congress that the economy remains fragile. Bernanke confirmed investors’ fears that the best scenario for the economy is only slow growth and relatively high unemployment. That sent the Dow Jones industrial average down nearly 110 points Wednesday.

Another round of earnings Thursday showed that if the economy is slowing, many companies are not being affected too much by the downturn. The diversity of companies reporting results Thursday provides a good picture of the health of the global economy because they provide details about how much consumers are shipping, shopping and borrowing and manufacturers are producing.

Caterpillar Inc., 3M Co., UPS Inc. and AT&T Inc. all topped earnings forecasts and raised their outlooks for future profit. Only Travelers reported a dip in earnings, but that came as bad weather led to more claims payments.

Still more earnings are due out later in the day, including from American Express Co., Microsoft Corp. and Amazon.com Inc.

Ahead of the opening bell, Dow Jones industrial average futures rose 98, or 1 percent, to 10,156. Standard & Poor’s 500 index futures rose 11.90, or 1.1 percent, to 1,075.80, while Nasdaq 100 index futures rose 18.50, or 1 percent, to 1,834.00.

UPS shares jumped $1.99, or 3.3 percent, to $62.00 in pre-opening trading. AT&T shares rose 45 cents to $25.37. Caterpillar rose 13 cents to $67.00. Shares of 3M rose $1.25 to $83.55. Travelers fell 91 cents to $48.96.

The Labor Department said weekly claims for jobless benefits jumped by 37,000 to a seasonally adjusted 464,000. Economists polled by Thomson Reuters expected claims to rise to 445,000 last week.

The big jump comes after a big drop a couple of weeks ago when companies like General Motors reported fewer temporary layoffs than usual for the time of year.

Even with the distorted numbers, high unemployment remains of the biggest obstacles to a strong, sustained recovery.

People out of work or uncertain about their jobs have cut back on spending, which is the primary driver of economic activity in the U.S. They have also stopped buying homes now that government incentives have expired.

The housing market, which helped push the economy into recession in 2008, is still mired in a slump. Economists predict sales of previously occupied homes fell to an annual rate of 5.18 million in June from 5.66 million a month earlier.

The report from the National Association of Realtors is due out at 10 a.m. EDT.

Before Bernanke’s comments sent stocks falling Wednesday, shares had climbed modestly because of some upbeat earnings reports. Morgan Stanley, Wells Fargo & Co., Coca-Cola Co. and United Technologies Corp. all reported better-than-expected profit.

Meanwhile, bond prices dipped Thursday as investors jumped back into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.92 percent from 2.88 percent late Wednesday.

Overseas, Britain’s FTSE 100 rose 1 percent, Germany’s DAX index gained 1.7 percent and France’s CAC-40 rose 1.7 percent. Japan’s Nikkei stock average fell 0.6 percent.