Futures surge on economic newsUnexpectedly strong GDP number drives stock futures higher; new home sales and Beige Book reports to come.NEW YORK (CNNMoney.com) -- Stock futures jumped on news that the economy is growing much faster than originally estimated in the third quarter, according to the federal government. Futures, which predict the direction of stocks at the open, were higher in early trading after the report on the gross domestic product and ahead of information on new home sales and the Fed's latest reading of economic conditions across the nation, known as the Beige Book. The gross domestic product, the broad measure of the nation's economic activity, grew at a 2.2 percent annual rate, much better than the 1.6 percent rate in the government's original estimate. Economists surveyed by Briefing.com had forecast a revision up to only 1.8 percent. (Full story) The dollar gained on the strong GDP number, rising to 116.36 against the yen, and sending the euro down to $1.3146. Stocks rallied Tuesday afternoon after Bernanke painted a relatively healthy picture of the economy, indicating that weakness in the housing market may not put a significant dent in growth. Oil prices topped the $61 a barrel mark ahead of the 10:30 a.m. government report on U.S. fuel inventories. U.S. crude was up 22 cents at $61.21 a barrel, while Brent crude futures gained 27 cents to $61.48. At 10 a.m. the Census Bureau will report on new home sales. The National Association of Realtors reported Tuesday that the pace of sales of existing homes ticked up in October for the first time since February, but those sales were spurred by the largest drop ever recorded in home prices on a year-over-year basis. New home sales have been dropping even faster than existing home sales, according to earlier reports. At 2 p.m. the Fed releases its so-called "Beige Book," in which the Fed's district banks report on economic conditions in their regions. In corporate news, drugmaker Pfizer (Charts) announced it is slashing 20 percent of its U.S. sales force, or about 2,000 jobs. Shares of the Dow component were up 2.2 percent in Frankfurt trading early Wednesday. More than 35,000 hourly workers at Ford Motor (Charts), almost half of its U.S. factory workers, have taken offers from the embattled automaker to leave the company, according to a report in the Detroit News. If true, the departures could help the company cut labor costs faster than had been hoped when it set a target of 30,000 cuts. Ford shares were up about 1.5 percent in heavy Frankfurt trading. Media and entertainment conglomerate Walt Disney (Charts) raised its dividend nearly 15 percent after the market close Tuesday. Its shares were also up more than 1 percent in Frankfurt. The Wall Street Journal reports that drugmaker Novartis (Charts) may be prepared to sell its Gerber baby food unit for $4 billion to $5 billion and Nestle may be the buyer. Billionaire Maurice "Hank" Greenberg, who was forced out as head of insurance giant American International Group (Charts), has begun buying huge blocks of stock of the New York Times (Charts), according to a report in the New York Post. The report says he could align with some large institutional shareholders, including Morgan Stanley Investment Management, to challenge the control of the company by the Sulzberger family. Treasury prices were lower, taking the yield on the 10-year note to 4.52 percent from 4.50 late Tuesday. Stocks closed higher in Asia on Wednesday, while stocks in Europe also gained. |
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