Stock futures point to higher open on strong results from HP, Applied Materials, but CPI, fuel inventory reports could change direction.
May 17, 2006: 6:16 AM EDT
NEW YORK (CNNMoney.com) - Futures were getting a lift from strong tech earnings ahead of a much anticipated inflation report due before markets open.
U.S. stock futures were up in early trading, indicating a higher open for U.S. markets, after better than expected earnings gain from computer and peripheral maker Hewlett-Packard (Research) as well as from chip equipment maker Applied Materials (Research). Shares of HP gained nearly 4 percent in after-hours trading following the report Tuesday, while Applied Materials initially rose, then fell on revenue guidance that was lower than forecasts.
The direction of futures could change after 8:30 a.m. ET when the U.S. Labor Department releases its Consumer Price Index. Economists surveyed by Briefing.com forecast that the government's main inflation measure will be up 0.5 percent in April on higher energy prices, following a 0.4 percent rise in March. The so called core CPI, which excludes energy and food prices, is forecast to be up 0.2 percent.
Investors have been particularly concerned about inflation pressures in recent days as they look for clues as to what the Federal Reserve will do with interest rates at its next meeting in late June.
Oil prices climbed above $70 a barrel in early trading ahead of the 10:30 a.m. ET report on U.S. fuel inventories, after Iran rejected a European offer of a light-water nuclear reactor in return for giving up its own uranium enrichment program.
The June light crude futures contract for NYMEX was up 47 cents to $70 in electronic trading, while the July contract for Brent crude gained 42 cents to $70.50
Gold also reversed recent losses and rose more than 2 percent to above $700 an ounce
Major markets in Asia closed higher Wednesday as Japan's Nikkei snapped a six-day slide, while major European markets were mixed in early trading after minutes of the Bank of England meeting in May showed some central bankers there voting for a rate cut while others voted for a rate hike. England's central banks left rates unchanged at the meeting.
Treasury prices were lower, lifting the yield on the benchmark 10-year note to 5.12 percent from the 5.10 percent level reached late Tuesday. The dollar was lower against the yen and the euro.