Dow May Open Higher On Earnings Hopes

LONDON — Stock index futures at 6.30am ET indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI) may open up by 5 points this morning, while the S&P 500 (SNPINDEX: ^GSPC) may open unchanged.

European markets edged higher this morning on a mix of economic data and earnings reports. Eurozone economic sentiment rose to 92.5 in July, up from 91.3 in June, although below the average level of 100. In Spain, GDP fell by 0.1% in the second quarter of this year, the smallest fall since the third quarter of 2011. In London, Barclays (LSE: BARC) (NYSE: BCS.US) was down 7.2% at 6.30am ET, after the bank announced a $9 billion rights issue, while oil supermajor BP also fell after it reported a fall in earnings and a rise in costs related to the Gulf of Mexico disaster.

In the US today, there’s more housing data at 9am, when the Case-Shiller home price index for May is due to be published. This will be followed at 10am by July’s consumer confidence index, which is expected to read 81.1, marginally lower than the 81.4 recorded in June. Investors may be wary of making new commitments ahead of tomorrow’s data, which includes the latest GDP figures and the latest FOMC announcement from the Federal Reserve.

Today’s earnings calendar is packed with big names, including Sprint Nextel, which earlier reported a second-quarter net loss of $1.6bn or $0.53 per share, worse than the $0.46 per share loss it reported for the same period last year. Sprint said that the loss was partly due to the costs associated with shutting down its Nextel platform and emphasised that the number of subscribers to its Sprint-branded service rose during the quarter. Other notable companies due to report quarterly results before markets open today include Goodyear Tire, Pfizer, Merck & Co, NYSE Euronext, Cummins, Office Depot, Corning,and Amgen.

Herbalife (NYSE: HLF.US) stock may also be actively traded this morning. Herbalife closed up 3.6% last night and was 4.8% higher in pre-market trading this morning, following the company’s latest quarterly results, which showed that it delivered adjusted earnings of $1.41 per share during the second quarter, beating analysts’ estimates for $1.18 per share. The company raised its profit forecast for the full year to $4.95 per share, from a previous forecast of $4.80 per share.

Finally, let’s not forget the Dow’s daily movements can add up to some serious long-term gains. Indeed, Warren Buffett recently wrote: “The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions.

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> Roland owns shares in BP but does not own shares in any of the other companies mentioned in this article.