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Stocks May See Early Strength On Upbeat Earnings News - U.S. Commentary

4/20/2012 8:53 AM ET

Stocks are likely to move back to the upside in early trading on Friday after moving mostly lower over the course of the previous session. The major index futures are currently pointing to a notably higher open for the markets, with the Dow futures up by 74 points.

The upward momentum for the markets is largely due to a positive reaction to quarterly results from big-name companies such as Microsoft (MSFT), General Electric (GE), and McDonald's (MCD).

After the close of trading on Thursday, Microsoft reported fiscal third quarter earnings of $0.60 per share, better than the consensus estimate of $0.58 per share. Revenues rose 6 percent to $17.4 billion, exceeding the $17.2 billion consensus estimate.

Shares of Microsoft are advancing by 3.3 percent in pre-market trading, with the software giant's better than expected results likely to contribute to early strength in the tech sector.

While GE reported first quarter net earnings that fell year-over-year, the diversified conglomerate reported adjusted earnings of $0.34 per share, a penny above analyst estimates. Revenues fell 8 percent year-over-year to $35.2 billion but also came in above expectations.

Fast food giant McDonald's reported first quarter earnings that rose to $1.23 per share from $1.15 per share in the year-ago quarter, in line with estimates. The company also reported sales growth that matched the expectations of economists.

Honeywell (HON), Advanced Micro Devices (AMD), and Capital One Financial (COF) are among the other well-known companies that reported better than expected quarterly results.

The upbeat earnings news is likely to generate early buying interest, although trading activity may be somewhat subdued amid a lack of major U.S. economic data and lingering uncertainty about the financial situation in Europe.

After seeing considerable volatility in morning trading on Thursday, stocks moved mostly lower in the afternoon and ended the day in the red. A batch of largely disappointing U.S. economic data weighed on the markets, offsetting positive sentiment generated by some upbeat bank earnings.

The major averages climbed off their worst levels going into the close but remained firmly negative. The Dow dropped 68.65 points or 0.5 percent to 12,964.10, the Nasdaq fell 23.89 points or 0.8 percent to 3,007.56 and the S&P 500 slid 8.22 points or 0.6 percent to 1,376.92.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Friday. While Japan's Nikkei 225 Index ended the day down by 0.3 percent, Hong Kong's Hang Seng Index edged up by 0.1 percent.

Meanwhile, the major European markets have all moved to the upside on the day. The German DAX Index is up by 0.9 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 Index are up by 0.4 percent and 0.3 percent, respectively.

In commodities trading, crude oil futures are climbing $1.07 to $103.34 a barrel after receding $0.40 to $102.27 a barrel on Thursday. Gold futures are rising $3.10 to $1,644.50 an ounce. In the previous session, the precious metal edged up $1.80 to $1,641.40 an ounce.

Among currencies, the U.S. dollar is trading at 81.70 yen compared to the 81.60 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.319 compared to yesterday's $1.3137.

by RTT Staff Writer

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