Data, Exxon Encourage Stock Futures
By DONNA KARDOS YESALAVICH
NEW YORK—U.S. stock futures firmed despite continued concerns over unrest in Egypt, as investors were reassured to see the Suez Canal was operating as normal while data showed U.S. consumer spending rose more than expected in December.
Dow Jones Industrial Average futures were up 33 points at 11808 recently, while Standard & Poor's 500 futures edged up 5 points to 1277 and Nasdaq Composite futures rose 6 points to 2274. Prior to the data, the Dow futures had been up 43 points, while S&P 500 futures were up 6 points and Nasdaq futures rose 8 points. Changes in U.S. stock futures don't always accurately predict early moves after the open.
The small gains in stock futures followed the stock market's biggest one-day slump in months on Friday thanks to worries over Egypt. Still, the Dow is on pace to close out the month with its first January gain in four years and its best January performance in 14 years.
But safety assets, which had been on strong on Friday, reversed from their strong Friday climb. The dollar fell, with the U.S. Dollar Index, tracking the U.S. currency against a basket of six others, down 0.5%. Treasurys also fell, with the declines lifting the yield on the 10-year note up to 3.36%. Gold futures shed 1%.
The activity came as investors digested the latest reports out of Egypt. A coalition of opposition groups called for a million people to take to Cairo's streets Tuesday to ratchet up pressure on President Hosni Mubarak to leave. American and other world leaders were intensifying calls for an orderly transition to a democratic system as demonstrations against Mubarak's administration continued into a seventh day.
Market watchers were relieved to hear that Suez Canal operations were normal, as fears had escalated on Friday that the canal might be closed. Shippers over the weekend and early Monday said traffic was still moving.
"There's still concern but with the Suez Canal operating as normal ... there's a little bit of relief coming to the market, said John Brady, senior vice president at MF Global.
In addition, he said, market participants are now viewing Friday's drop as "driven by a lack of liquidity and the selloff got a little bit exaggerated."
.The market was also encouraged by data showing U.S. consumers, supported by fatter paychecks and low prices, accelerated their spending at the end of 2010, giving a needed boost to the economy's weak recovery. Consumer spending grew by 0.7% in December while Americans' incomes rose by 0.4% for a second month in a row. Economists had estimated spending would rise by 0.5% and incomes by 0.4% in December.
Other data showed inflation still remains below the mark central bankers consider consistent with price stability. The December personal consumption expenditures price index was up by 0.7% from a year ago, after a 0.8% gain in November. That's below the Fed's understood target range of 1.5% to 2%. As long as the measure undershoots where policy makers want it to be, Fed officials should feel pressure to act to aid the economy.
The euro climbed to $1.3697, from $1.3609 late Friday, as a Wall Street Journal story said European leaders could announce broad outlines of a new deal to boost the euro zone's bailout funds at a summit on Friday, paving the way for a final agreement when they next meet in March.
The summit will come days after euro-zone leaders and senior politicians took the opportunity at the World Economic Forum in Davos to try to convince top business figures, bankers and government officials of their commitment to the euro.
Among stocks in focus, Exxon Mobil rose 1.3% premarket. The oil giant's fourth-quarter earnings surged 53%, beating analysts' expectations thanks to higher oil prices, improved refining margins and its unconventional gas production operations.