Markets Ready To Rally

Set for rally

RTGAM

Stock market indexes continued to march higher on Thursday, on expectations that the worst is over for the global economy and corporate earnings.


U.S. stock index futures were up sharply with about an hour before markets open, suggesting that stocks will rise at the start of trading. Futures for the Dow Jones industrial average were up 108 points. Futures for the broader S&P 500 were up 13 points. Both indexes rallied more than 2 per cent on Wednesday.


In Europe, the U.K.'s FTSE 100 was up 1.9 per cent and Germany's DAX index was up 2.4 per cent in afternoon trading. In Asia, after a one-day break on Wednesday, Japan's Nikkei 225 surged 3.9 per cent in overnight trading.


The U.S. Labor Department reported that initial jobless claims for the week ended April 24 decreased slightly to 631,000, better than the 640,000 claims that economists had been expecting and slightly below the previous week's claims - adding to the impression that things are getting "less bad." However, continuing claims rose close to 6.3 million, suggesting that recently laid off worker are having a tough time finding work.


"The past few weeks claims data are beginning to look increasingly like a peak," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, in a note. "What is not clear, though, is whether this peak represents a correction after the very rapid leap in claims after the Lehman failure or a real cyclical turning point."


Meanwhile, incoming first-quarter earnings continue to decline sharply but have generally come in better than expected. Dow Chemical Co.'s earnings fell 97 per cent, but beat analysts' estimates. Starbucks Corp.'s earnings fell 77 per cent, but also topped expectations.


The Wall Street Journal noted that about two-thirds of the companies in the S&P 500 that have reported first-quarter earnings have beaten analysts' expectations, according to Thomson Reuters.

Copyright 2001 The Globe and Mail