Stocks set to rise after growing business confidence in Germany; durable goods report

By Stephen Bernard, AP
Friday, September 24, 2010

Stock futures climb after manufacturing report

NEW YORK — Stock futures are extending their gains after a report showed orders for manufacturing goods aside from the volatile transportation sector rose sharply last month.

Stripping out transportation, durable goods orders rose 2 percent last month. That’s twice as fast as economists forecast. Orders fell 1.3 percent last month including transportation orders.

Major indexes were already set to restart a rally Friday after a surprise jump in business confidence in Germany tempered renewed worries about Europe’s economy.

Dow Jones industrial average futures are up 89, or 0.8 percent, at 10,695. S&P 500 futures are up 10.20, or 0.9 percent, at 1,131, while Nasdaq 100 futures are up 20, or 1 percent, at 2,001.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Stock futures edged higher Friday as traders anticipated reports on durable goods orders and new home sales for fresh clues about the health of the economy.

A surprise jump in business confidence in Germany tempered fresh worries about Europe’s economy, which could allow stocks to recover some of Thursday’s losses. Stocks fell a day ago, in part, due to news that business activity slowed in the 16 countries that used the euro. European markets were not able to erase losses after the news, but the euro did rise sharply against the dollar.

Many investors remained cautious about the global economy and sought perceived safer alternatives to stocks. Gold rose above $1,300 an ounce for the first time.

Traders were also looking for new clues about the strength of the U.S. economy a day after a jump in unemployment claims helped drive stocks lower.

A report on durable goods orders is expected to show a small drop in orders last month. Economists polled by Thomson Reuters expect orders for big-ticket manufactured goods fell 1 percent in August. However, excluding the volatile transportation sector, orders likely rose 1 percent.

A separate report from the Commerce Department is expected to show sales of new homes rose last month after touching the lowest level on records dating back to 1963 in July. Economists forecast sales rose 5.1 percent to an annual rate of 290,000.

A rise in August sales would match a similar report released Thursday that showed sales of previously occupied homes rose in August from depressed levels in July. Sales plummeted in the months after a home buyer tax credit expired at the end of April, but analysts are relatively encouraged that sales over the summer might be the bottom of the market.

Ahead of the opening bell, Dow Jones industrial average futures rose 36, or 0.3 percent, to 10,642. Standard & Poor’s 500 index futures rose 4.10, or 0.4 percent, to 1,124.50, while Nasdaq 100 index futures rose 10.75, or 0.5 percent, to 1,992.25.

Gold set a new record of $1,301.30 an ounce in morning trading before pulling back to $1,300.00 an ounce.

Bond prices were narrowly mixed. The yield on the 10-year Treasury note, which moves opposite its price, rose to 2.57 percent from 2.55 percent late Thursday.

Traders were also closely watching Congress after Senate Democrats announced late Thursday they would delay a vote on whether to extend Bush-era tax cuts until after the midterm elections on Nov. 2. That could be an indication Congressional leaders are backing off their stance that cuts should not be extended to individuals making more than $200,000 and married couples making more than $250,000.

Businesses have been held in limbo for months about how the tax debate might play out, which many analysts say has kept companies from hiring new workers. Any hints that the cuts might be extended to everyone could be enough to lift the market and lead to an increase in hiring.

In corporate news, Nike Inc. said its fiscal first-quarter revenue and profit jumped. Just as importantly, the athletic shoe and apparel maker said upcoming orders jumped by their largest level in a decade. That’s a good sign because it means retailers are expecting sales to pick up in the coming months.

Nike shares rose $4.20, or 5.4 percent, to $81.87 in pre-opening trading.

Overseas, Britain’s FTSE 100 fell 0.2 percent, Germany’s DAX index dropped 0.2 percent, and France’s CAC-40 fell 0.1 percent. Japan’s Nikkei stock average fell 1 percent.

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