Stock futures jump to kick off October after jump in Chinese manufacturing activity

By Stephen Bernard, AP
Friday, October 1, 2010

Stock futures rise following overseas gains

NEW YORK — Stock futures rose Friday as signs of strong manufacturing growth in China drove stocks higher worldwide.

China’s key reading on manufacturing activity jumped in September from August, relieving concerns that growth in the world’s second-largest economy is slowing. China has been relied upon to pick up global demand as the U.S. economy remains sluggish.

Traders in the U.S. will get their own reading on domestic manufacturing activity later Friday. The report often sets an early tone for trading each month. Investors could be slightly more optimistic about the manufacturing data after a report Thursday showed manufacturing activity in the Chicago area rose in September.

Economists polled by Thomson Reuters forecast the Institute for Supply Management’s manufacturing index fell to 54.5 last month from 56.3 in August. Any reading above 50 indicates expansion in the sector.

A much stronger than expected ISM report a month ago helped kick off a rally that drove stocks to their best September performance since 1939.

Stock futures were also getting a lift after personal income and spending both rose more than expected in August. Income jumped 0.5 percent in August and spending rose 0.4 percent. Economists were expecting both to rise 0.3 percent.

Increased spending could be a sign that the economy might start to be gaining a bit more strength. Consumer spending is a primary driver of economic growth.

Ahead of the opening bell, Dow Jones industrial average futures rose 48, or 0.4 percent, to 10,771. Standard & Poor’s 500 index futures rose 6.10, or 0.5 percent, to 1,142.80, while Nasdaq 100 index futures rose 14.00, or 0.7 percent, to 2,009.50.

Traders will also get a final reading on consumer sentiment. A final reading of the University of Michigan/Reuters consumer sentiment index is likely to indicate a drop in confidence last month.

In corporate news, Hewlett-Packard Co. shares dropped in pre-opening trading after the computer company named Leo Apotheker its new CEO. Shares fell $1.08, or 2.6 percent, to $40.99.

Bond prices slipped and interest rates rose as investors moved into riskier assets. The yield on the 10-year Treasury note, which is a benchmark for interest rates on mortgages and other loans, rose to 2.53 percent from 2.51 percent late Thursday.

Overseas, China’s Shanghai composite index jumped 1.7 percent, while Japan’s Nikkei stock average rose 0.4 percent.

Britain’s FTSE 100 rose 0.8 percent, Germany’s DAX index gained 0.4 percent, and France’s CAC-40 fell 0.1 percent.

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