Stocks: Some optimism, but Europe still a worry

@CNNMoneyInvest April 19, 2012: 9:04 AM ET
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NEW YORK (CNNMoney) -- U.S. stocks were headed for a higher open Thursday after a relatively successful bond auction in Spain and solid quarterly results from Bank of America and Morgan Stanley.

The Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were up about 0.3%. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

An auction of €2.5 billion of Spanish 10-year bonds drew strong demand early Thursday. But Spain released a relatively low volume of bonds, helping to ensure that solid demand, noted Brian Barry, a fixed income analyst with Investec in London.

"They're trying to manage expectations," Barry said. "It's not necessarily a ringing endorsement of Spanish bonds."

The yield on the 10-year note shot up to 5.92% following the auction. French yields also rose, underscoring the continuing worries about Europe's fiscal situation.

Back in the U.S., investors will face another wave of corporate results. Economic reports were also being released on initial jobless claims and existing home sales.

Ahead of Thursday's open, Bank of America (BAC, Fortune 500) reported that its quarterly net income had declined sharply versus last year, though this drop came after an accounting adjustment of nearly $5 billion. After factoring out non-operating expenses, the company's earnings more than doubled from a year ago, and shares rose 3% in early trading.

Morgan Stanley (MS, Fortune 500), too, reported a large accounting adjustment that cut into its earnings. Excluding this expense, earnings and revenue were up versus last year, and shares rose 5%.

Overall, recent corporate earnings have come in better than expected. Of the 77 companies in the S&P 500 that had reported their quarterly results as of Wednesday evening, 63 beat expectations, while eight matched and only six have missed, according to Capital IQ.

U.S. stocks closed down modestly Wednesday, as investors found new reasons to worry about Europe's economy. Spain released data showing that Spanish banks held more problem loans than expected, which added to worries over the country's finances.

World markets: European stocks were mixed in afternoon trading. Britain's FTSE 100 (UKX) was up 0.5%, while the DAX (DAX) in Germany dropped 0.1% and France's CAC 40 (CAC40) shed 0.4%.

Asian markets ended mixed. The Shanghai Composite (SHCOMP) slipped by 0.1% and Japan's Nikkei (N225) fell 0.8%, while the Hang Seng (HSI) in Hong Kong gained 1.0%.

Economy: The U.S. government said first-time unemployment claims declined by 2,000 to 386,000 in the week ended April 14. Initial claims were expected to come in at 375,000, according to analysts surveyed by Briefing.com.

The National Association of Realtors will release its March existing home sales data after the opening bell. Economists surveyed by Briefing.com expect sales to have edged up to an annual rate of 4.68 million in March from 4.59 million in February.

Companies: Travelers (TRV, Fortune 500) shares rose ahead of the opening bell after the insurance provider reported earnings that handily beat expectations.

After the bell on Wednesday, American Express (AXP, Fortune 500), eBay (EBAY, Fortune 500) and restaurant operator YUM! Brands (YUM, Fortune 500) released quarterly results that beat analysts' expectations. eBay's stock rose in after-hours trading, while American Express shares rose slightly and YUM!'s shares dropped.

eBay shares rose 9% in premarket trading Thursday.

Nokia (NOK) shares were down 3% after the company reported a steep first-quarter loss, struggling against strong competition in the mobile market. Verizon (VZ, Fortune 500) shares were up slightly after the company reported earnings and revenue in line with expectations.

After Thursday's close, Microsoft (MSFT, Fortune 500) will report first-quarter earnings, which analysts expect to come in at 57 cents per share.

Currencies and commodities: The dollar gained against the euro and the Japanese yen but fell against the British pound.

Oil for May delivery rose 25 cents to $102.42 a barrel.

Gold futures for April delivery dropped $2.20 to $1,636.60 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 1.96%. To top of page

Index Last Change % Change
Dow 17,122.01 15.31 0.09%
Nasdaq 4,569.62 -1.02 -0.02%
S&P 500 2,000.12 0.10 0.00%
Treasuries 2.36 -0.03 -1.25%
Data as of 7:34pm ET
Company Price Change % Change
Bank of America Corp... 16.20 -0.13 -0.80%
Apple Inc 102.13 1.24 1.23%
Facebook Inc 74.63 -1.33 -1.75%
Yahoo! Inc 38.18 0.39 1.03%
Pfizer Inc 29.49 0.28 0.96%
Data as of 4:02pm ET
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15 yr fixed3.17%3.23%
5/1 ARM3.30%3.37%
30 yr refi4.06%4.19%
15 yr refi3.16%3.18%
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