Sentiment Upbeat Before Consumer Data

(RTTNews) - The major U.S. index futures are pointing to a modestly higher opening Friday morning, suggesting a carry over of the fairly positive mood that was prevalent in the market in recent sessions. The Dow Industrials has been having an eight session uninterrupted winning run, while the other major averages have been higher for three straight sessions. Although the recent market gains have been built on the back of positive data points that lent support to expectations of a recovery, anemic trading volume is relaying the uneasiness of traders over the 'recovery theme.'

As of 6:30 AM, the Dow futures are up 26 points, the S&P futures are gaining 3.90 points and the Nasdaq futures are moving up 7.75 points.

The run up in commodity prices is reinforcing at least the expectations that green shoots of recovery are beginning to sprout. That said, oil seems to be benefiting more from the dollar's weakness than sound oil market fundamentals. And the greenback's safe haven status ensures that it receives a pounding every time the speculative equity markets move up. Currently, oil is trading above the $73-a-barrel level after seeing a modest strength in Thursday's session.

With the salubrious effect of corporate earnings having ceased following the end of the reporting, markets are fighting hard to maintain the positive momentum. In Friday's session, the markets may mostly track the lead from the rest of the global markets and a couple of economic reports that are due for the day.

At 8:30 am ET, the Commerce Department is scheduled to release its personal spending and income report for July. Personal spending is expected to see a smaller increase than in the previous month, with the measure likely to have received some support from cash for clunkers program-induced auto sales. Meanwhile personal income is expected to have rebounded by 0.1% after June's steep 1.3% drop.

Given the solid increase in the Conference Board's consumer confidence index for August, one can expect the Reuters/University of Michigan's survey to show that the final reading of its consumer sentiment index rose slightly to 64 from the mid-month reading of 63.2.

Meanwhile, on the corporate front, the news flow has been light. Traders are likely to sift through the earnings of retailers such as CostPlus (CPWM | Quote | Chart | News | PowerRating), J. Crew Group (JCG | Quote | Chart | News | PowerRating) and Tiffany (TIF | Quote | Chart | News | PowerRating).

Jeweler Tiffany, which is scheduled to report its results before the markets open, is expected to report a profit of 33 cents per share, significantly lower than the 63 cents per share reported last year. Revenues may have declined about 18% to $602.14 million.

Apparel retailer J. Crew reported second quarter earnings that beat estimates and issued third quarter earnings per share guidance that is in line with or above analysts' average estimate. Meanwhile, department store CostPlus reported a wider loss for its second quarter and issued a below-consensus guidance for its third quarter.

Chipmaker Marvell Technologies (MRVL | Quote | Chart | News | PowerRating) reported better-than-expected second quarter results and issued an upbeat forecast. Forest Labs (FRX | Quote | Chart | News | PowerRating) is also likely to be in focus after a drug developed by the company along with Swiss-based Nycomed was found to be effective in late stage studies in treating chronic obstructive pulmonary disease.

Across the Atlantic, in Europe, stocks are trading sharply higher, with the major averages in the region gaining in excess of 1% each, following two sessions of lackluster performance. Commodities and financial stocks are showing significant buying interest.

The U.K. Office of National Statistics released its revised GDP report for the second quarter that showed a slightly smaller than initially estimated contraction. Nevertheless, the upwardly revised 5.5% contraction marked the steepest ever drop in GDP. The quarterly decline was 0.7%. In another promising data, euro zone's economic confidence rose 4.6 points to 80.6 in August. The European Commissions' survey revealed that industrial and consumer sentiment improved as well, while the retail trade index slipped 1 point.

Earlier in the day, the Asian markets closed mostly higher despite China sliding on fears of a dilution in market capitalization following companies tapping the IPO market and the listed firms contemplating new offerings. Among the markets in the region, Australia rose 0.85%, closing at a 10-month high, and Japan's Nikkei 225 average advanced 0.57%.

After a modestly lower opening on Thursday, U.S. stocks experienced a steeper sell-off in the morning despite the not-so-negative economic reports. Thereafter, the major averages moved steadily higher, breaking into positive territory by the mid-session before closing modestly higher for the day.

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