Wall Street set for modest bounce after claims data, earnings

 

  U.S. stocks pointed to a higher open on Thursday, indicating the S&P 500 will modestly bounce from a broad selloff in the prior session after data showed initial jobless claims rose marginally last week and investors digested a slew of earnings reports.

 

Data showed the number of Americans filing new claims for unemployment benefits increased 4,000 to a seasonally adjusted 352,000 last week, slightly above the 350,000 estimate, which could further temper fears of a major setback in the labor market recovery.

 

Equities have been whipsawed in the past three sessions, with a 1 % move in either direction in the S&P 500 <.SPX> each day this week, the first such streak of volatility for the index since the start of February.

 

Worries about global demand have sparked selloffs in commodities, which in turn have led to weakness in equities. However, some equity investors continue to use any dips as a buying opportunity.

 

"It just seems like a rudderless ship right now that we've got really two offsetting factors - one clearly slowing, most certainly globally," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

 

"But on the other hand we have a huge flow of liquidity."

 

Earnings are expected from 28 companies in the benchmark S&P index on Thursday, including Dow components Microsoft Corp and IBM after the close.

 

Morgan Stanley reported a stronger-than-expected first-quarter profit of $958 million, compared with a year-earlier loss of $119 million, as its wealth management business grew, but shares edged down 0.1 % to $21.45 in premarket trade.

 

Verizon Communications Inc advanced 1 % to $50.01 in premarket trade after the telephone company posted a higher than expected quarterly profit, driven by strength in its wireless business.

 

But fellow Dow component UnitedHealth Group Inc lost 3.6 % to $54.10 after the largest U.S. health insurer said its first-quarter profit had fallen.

 

PepsiCo Inc reported better-than-expected quarterly earnings, as price increases helped margins and the company stood by its full-year forecast, sending shares up 1.3 % to $79.91 before the opening bell.

 

S&P 500 futures rose 4.4 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 33 points, and Nasdaq 100 futures added 9.5 points.

 

Earnings are expected to be soft this quarter, but most companies are forecast to beat earnings estimates that have been reduced by analysts.

 

S&P 500 earnings are now expected to have risen 1.7 % in the first quarter, up from the 1.5 % estimate at the start of the month, based on actual results from 56 companies and estimates for the rest, according to Thomson Reuters data through Tuesday morning.

 

Of the 56 companies that have reported earnings through Wednesday morning, 66.1 % have topped analyst expectations but only 48.2 % have beaten revenue forecasts.

 

"Companies will likely beat their estimates it's just these estimates now for the quarter have been beaten into submission. So they are just hopping over a limbo stick," said Ablin.

 

Also at 10 a.m. (1400 GMT), the Conference Board will release its report on March leading economic indicators. Economists in a Reuters survey forecast a 0.1 % increase, compared with a 0.5 % rise in February.