US stock futures rise on positive microchip results
Thu Jan 26, 2006 07:05 AM ET
By Caroline Valetkevitch
NEW YORK, Jan 26 (Reuters) - U.S. stock futures rose strongly on Thursday, indicating a higher market opening, after positive financial results from microchip companies and higher-than-expected earnings by drug maker Eli Lilly and Co. (LLY.N: Quote, Profile, Research) .
Specialty chipmaker LSI Logic Corp. (LSI.N: Quote, Profile, Research) posted a higher-than-expected quarterly profit late on Wednesday, while others, including communications chip supplier Conexant Systems Inc. (CNXT.O: Quote, Profile, Research) , issued bullish outlooks.
General Motors Corp. (GM.N: Quote, Profile, Research) shares rose 1.1 percent to $24.10 after the bell on Wednesday. A regulatory filing showed billionaire investor Kirk Kerkorian lifted his stake in the auto maker to 9.9 percent from 7.8 percent.
But investors were nervous over news of an apparent Hamas victory, which would shake up the Palestinian Authority and likely put peacemaking with Israel in a deep freeze.
Standard & Poor's 500 index futures (SPH6: Quote, Profile, Research) were up 7 points, well above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Nasdaq 100 index futures (NDH6: Quote, Profile, Research) were up 14 points, and Dow Jones industrial average futures (DJH6: Quote, Profile, Research) were up 66 points.
Eli Lilly on Thursday reported a fourth-quarter profit, compared with a slight loss a year earlier.
GM and heavy equipment maker Caterpillar Inc. (CAT.N: Quote, Profile, Research) are among a number of big companies expected to report financial results on Thursday.
Shares in Europe and Japan were higher, with Sony Corp. (6758.T: Quote, Profile, Research) advancing.
"Overall, you're going to see a pretty strong opening. A lot of semi numbers were pretty good last night," said Barry Ritholtz, fund manager at Ritholtz Capital Partners.
"Earnings, I think, have a been a little soft. To me, it's a warning sign the economy is slowing," he said. Ritholtz said he thinks earnings are going to be less than expected. "So it means people have to be worried about what they're paying for stocks," he said.
On the economic front, the Commerce Department releases December durable goods orders at 8:30 a.m. (1330 GMT). Economists in a Reuters survey expect a median rise in orders of 1.0 percent compared with a 4.4 percent rise in November.
Altera Corp. (ALTR.O: Quote, Profile, Research) , the maker of programmable microchips, reported net income increased amid growing demand. [ID:nWEN8668] Its shares rose 2.8 percent to $19.45 after the bell on Wednesday.
The solid microchip reports follow disappointing results last week from Intel Corp. (INTC.O: Quote, Profile, Research) , the world's biggest chipmaker.
Wireless technology company Qualcomm Inc. (QCOM.O: Quote, Profile, Research) showed a higher profit, but investors were disappointed by its forecasts.
On Wednesday, U.S. stocks ended slightly lower, hurt by signs of slackening corporate profit growth and a slowdown in existing home sales.
The Dow Jones industrial average was down 2.48 points, or 0.02 percent, at 10,709.74. The Standard & Poor's 500 Index was down 2.18 points, or 0.17 percent, at 1,264.68. The technology-laced Nasdaq Composite Index was down 4.60 points, or 0.20 percent, at 2,260.65.
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