Stock futures edge higher on improving signs of overseas growth, new corporate deals

By Stephen Bernard, AP
Tuesday, September 28, 2010

Stock futures inch higher before confidence report

NEW YORK — Stock futures inched higher Tuesday as traders were cautiously optimistic about some improving economic reports overseas and corporate dealmaking continued.

The Asian Development Bank raised its forecast for the region’s economic growth this year. Consumer confidence in Germany rose as more people are optimistic about job increases in Europe’s largest economy.

Growth in consumer confidence in Germany comes on the same day where a key report on consumer confidence in the U.S. is scheduled for release. The Conference Board is expected to say U.S. consumer confidence dipped slightly this month compared with August.

Economists polled by Thomson Reuters forecast the consumer confidence index dipped to 52.5 from 53.5 last month. It takes a reading of 90 to indicate a strong, healthy economy.

Confidence remains low in the U.S. as unemployment remains high and economic growth is tepid. But investors have been able to drive stocks sharply higher throughout September because economic data indicates the country is strong enough to avoid falling back into recession.

The Dow Jones industrial average has jumped 8 percent this month, putting it on pace for its best September since 1939.

In corporate news, dealmaking continued for a second day. Drug developer Endo Pharmaceuticals Holdings will buy Qualitest Pharmaceuticals for $1.2 billion. A wave of dealmaking Monday wasn’t enough to keep stocks from sliding Monday as traders pocketed some profits and some concerns remained about the health of Europe’s banks.

Research in Motion Ltd. announced it’s rolling out a competitor to Apple Inc.’s iPad, called the PlayBook. The PlayBook is set to launch in early 2011 in the U.S.

Ahead of the opening bell, Dow Jones industrial average futures rose 32, or 0.3 percent, to 10,782. Standard & Poor’s 500 index futures rose 3.90, or 0.3 percent, to 1,141.60, while Nasdaq 100 index futures rose 9.00, or 0.5 percent, to 2,016.25.

Bond prices wavered in a tight range. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.52 percent from 2.53 percent late Monday.

The lack of movement in the bond market came after a report said the Federal Reserve could alter how it might purchase Treasurys in an effort to stimulate the economy. The Fed is now mulling a plan to buy small batches of Treasurys in a smaller scale program than making large purchases during a finite period like it did in 2009 during the recession. However, there is still no certainty it will re-enter the market at all. It hinted it could after a meeting last week.

Traders received another report on the housing market that shows the sector remains weak. The S&P/Case-Shiller Home Price Index, which measures home prices in 20 of the nation’s largest metropolitan areas, rose 3.2 percent in July compared with a year ago, slightly better than expectations. But it was a slowdown from the 4.2 percent gain in June.

Endo Pharmaceuticals shares rose $2.45, or 8 percent, to $33.06 in pre-opening trading.

Research in Motion shares fell 50 cents to $47.86. Apple shares rose 72 cents to $291.88.

Overseas, Germany’s DAX index rose 0.4 percent, while France’s CAC-40 rose 0.4 percent. Britain’s FTSE 100 rose 0.1 percent.

Japan’s Nikkei stock average fell 1.1 percent. Japan’s economy was excluded from the Asian Development Bank’s growth forecast, which only includes developing and newly industrialized countries.

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