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Stock futures are surging higher this morning on better than expected earnings from Dow components Citigroup (NYSE:C), General Motors (NYSE:GM) and Johnson & Johnson (NYSE:JNJ).

Shares of Citigroup (C) $30.31 gained $2.29 over the New York ECNs after reporting Q3 net income of $0.74 a share, which was a penny better than consensus.

The world's largest automaker has General Motors (NYSE:GM) $33.26 gaining $2.73 over the ECNs to $35.99 after reporting Q3 EPS of $1.20 versus consensus of $0.99.

Drug maker and consumer products giant Johnson & Johnson (NYSE:JNJ) $57.83 added $1.47 to $59.30 after beating estimates by a penny. The company reported Q3 earnings of $0.60 per share while growing revenues 12.7% year-over-year to $9.08 billion.

Also reporting earnings and posting earnings well ahead of analyst's estimates are Bank of America (NYSE:BAC) $60.71 reporting EPS of $1.45, which was four cents better than consensus of $1.41.

While earnings season grabs the bulk of this morning's headlines, this morning's economic data shows that business inventories fell 0.1% in August, which was in line with economist's expectations. The lower inventories were led by leaner inventories at car dealerships. While inventories fell in August, sales edged up 0.2%, which was slower than July's 1.3% gain, but up 2.3% from the same month a year ago. Economist's believe that fewer inventories are a likely indication businesses are worried about the health of demand going forward. The inventory-to-sales ratio was a record tight 1.34 in August. The ratio compares to 1.43 in August 2001.

Despite the lackluster economic news, stock futures are rallying from some better than forecasted earnings as S&P futures (sp02z) gain 24 points to 865.60. NASDAQ futures (nd02z) are higher by 34.5 points at 942.00, while Dow futures surge 237 points to 8,095.

Fair value for the S&P 500 today is $0.39. That price will not change during the session. HL Camp & Company has their computers set for program buying at $1.50 and set for program selling at $-2.10. Fair value for the NASDAQ-100 today is $2.60.

The Treasury bond market is active after taking the day off yesterday in observance of Columbus Day with strong selling in the pits. The benchmark 10-year YIELD ($TNX.X) jumps higher to 3.93%, while the 10-year Bond December contract has price gapping lower to 113'235, falling 0.93%.

Jeff Bailey

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