Stocks were set for a strong rebound Thursday after another big batch of earnings was mostly positive and some encouraging signs of growth in Europe. Futures rose sharply.
European markets rose after a report showed unexpected economic growth in the 16-nation group that uses the euro. In recent months, investors worldwide have been concerned that mounting government debt in Europe would stall a global recovery. A jump in Europe's purchasing managers index is welcome relief for those prediction contraction on the continent.
The jump in futures comes a day after investors sold stocks because Federal Reserve Chairman Ben Bernanke warned Congress that the economy remains fragile. Bernanke confirmed investors' fears that the best scenario for the economy is only slow growth and relatively high unemployment. That sent the Dow Jones industrial average down nearly 110 points Wednesday.
Investors will get a weekly report on jobless claims and details on sales of existing homes Thursday that will likely confirm Bernanke's comments that the economy remains weak. Jobless claims likely rose after last week's data was skewed by seasonal factors. Home sales likely also fell as the housing market continues to weaken after the expiration of a homebuyer tax credit.
But another batch of earnings shows that if the economy is slowing, many companies are not being affected too much by the downturn. The diversity of companies reporting results Thursday provides a good picture of the health of the global economy because they provide details about how much consumers are shipping, shopping and borrowing and manufacturers are producing.
Caterpillar Inc., 3M Co., UPS Inc. and AT&T Inc. all topped earnings forecasts and raised their outlooks for future profit. Only Travelers reported a dip in earnings, but that came as bad weather led to more claims payments.
Still more earnings are due out later in the day, including from American Express Co., Microsoft Corp. and Amazon.com Inc.
Ahead of the opening bell, Dow Jones industrial average futures rose 102, or 1 percent, to 10,160. Standard & Poor's 500 index futures rose 12.70, or 1.2 percent, to 1,076.60, while Nasdaq 100 index futures rose 19.75, or 1.1 percent, to 1,835.25.
UPS shares jumped $2.46, or 4.1 percent, to $62.47 in pre-opening trading. AT&T shares rose 32 cents to $25.24. Caterpillar dipped 9 cents to $66.78 after initially rising following the earnings announcement.
The Labor Department's weekly report on jobless claims is expected to show people filing for unemployment benefits for the first time rose to 445,000 last week from 429,000 a week earlier, according to economists polled by Thomson Reuters. The report is due out at 8:30 a.m. EDT.
Initial claims have hovered in a tight range for most of the year, just above the levels that would indicate strong hiring by employers. High unemployment remains one of the biggest obstacles to a strong, sustained recovery.
People out of work or uncertain about their jobs have cut back on spending, which is the primary driver of economic activity in the U.S. They have also stopped buying homes now that government incentives have expired.
The housing market, which helped push the economy into recession in 2008, is still mired in a slump. Economists predict sales of previously occupied homes fell to an annual rate of 5.18 million in June from 5.66 million a month earlier.
The report from the National Association of Realtors is due out at 10 a.m. EDT.
Before Bernanke's comments sent stocks falling Wednesday, shares had climbed modestly because of some upbeat earnings reports. Morgan Stanley, Wells Fargo & Co., Coca-Cola Co. and United Technologies Corp. all reported better-than-expected profit.
Meanwhile, bond prices dipped Thursday as investors jumped back into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.91 percent from 2.88 percent late Wednesday.
Overseas, Britain's FTSE 100 rose 0.9 percent, Germany's DAX index gained 1.6 percent and France's CAC-40 rose 1.8 percent. Japan's Nikkei stock average fell 0.6 percent.
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