Stronger than expected earnings from Dow component Hewlett- Packard (NYSE:HPQ) $16.85 combined with a better than expected weekly jobless claims report have stock futures building gains as traders await the opening bell.
S&P futures (sp02z) trade higher by 4.3 points at 923.30, NASDAQ futures (nd02z) are gaining 10 points at 1,086, while Dow futures (dj02z) are bid higher by 33 points at 8,705.
Fair value for the S&P 500 today is $0.15. That price will not change during the session. HL Camp & Company has their computers set for program buying at $1.36 and set for program selling at $-1.34. Fair value for the NASDAQ-100 today is $1.50.
Highlights from the Hewlett-Packard (HPQ) fourth-quarter earnings had the company earning $0.24 per share, which was 2 cents better than consensus. Revenues fell -1% to $18 billion, but was still better than the $17.3 billion consensus. HPQ said it was comfortable with current Q1 consensus for EPS of $0.27 and $18.4 billion in revenues. On the company's conference call, it said it still doesn't see any marked improvement in customer IT spending and that it is not counting on a strong holiday season.
Despite some tempered guidance regarding expected customer spending near-term, investors appeared to be happy with the HPQ news and the stock trades up $1.55 from yesterday's close, or 10.8% at $18.40 in pre-market.
This morning's early economic warm up has the Labor Department reporting that initial jobless claims and the closely watched four-week average of benefits requests fell in the latest period.
For the week ended November 16, jobless claims fell by 25,000 to 376,000, the lowest mark in four months and below the 397K level predicted by Wall Street economists for the latest period.
The four-week average of claims, which smoothes out the weekly volatility, fell to 395,750 from 400,250. The last time the average was this low was the week ended August 24, when it was 394,500.
The latest week's data marked the first drop below the key 400,000 mark for the four-week average in nearly three months.
Economists have been eyeing this level as a good indicator of a worsening or improving labor market.
The report also showed that the number of people continuing to collect unemployment benefits decreased by 61,000 to 3.58 million.
While the markets get some very positive looking news from HPQ and jobless data, fellow Dow component General Electric (NYSE:GE) $24.80 lowered its 2002 earnings guidance to $1.51 per share, down from the expected result of $1.65 per share.
That guidance translates to Q4 earnings of 31 cents a share, including a $1.4 billion charge, or 14 cents per share for expected losses in its reinsurance business. That compares to current consensus of 45 cents in earnings that analysts expected.
On the positive side, GE said it will increase it quarterly dividend by 6% to 19 cents per share starting in the fourth quarter and will be paid starting in January.
Despite the lowering of earnings guidance, shares of GE, which closed yesterday at $24.80, are gaining 81 cents at $25.61 in light pre-market trading.
Treasuries are seeing selling this morning, which is resulting in higher YIELDS across the major maturities. The benchmark 10-year yield ($TNX.X) is rising to 4.138%. As discussed in last night's Index Trader Wrap at OptionInvestor.com, this is right at what appears to be the "neckline" of a potential reverse head and shoulders pattern in this bond's yield. It was my analysis that equity bulls want to see a break above the 4.15% level to have the pattern in play and give a yield target of 4.5%. If that were to take place in the coming weeks, the cash flowing OUT of this bond to have YIELD rising higher could continue to bolster equity action to the upside.
Later this morning, traders and investors will get another dose of economic data. At 10:00 economists look for the October Leading Indicators to decline -0.1%, then at 12:00 the Philadelphia Fed report for November has economists looking for a -0.5 decline, which would be well above October's drop of -13.1. Then, at 02:00 EST, the October Treasury Budget is expected to show a -$51.3 billion deficit.