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U.S. stocks to open higher, eyes on AOL, Kodak

23/07/2003 15:46
U.S. stocks are set to open flat to slightly higher on Wednesday, as investors are hit with a deluge of corporate earnings and seek evidence that a rebound is under way in the U.S. economy.

Amid a light economic calendar, Wall Street's focus will be squarely on companies' quarterly results.

Stocks in the earnings spotlight include AOL Time Warner Inc. AOL.N . Before the open, the world's largest media company reported a sharp increase in its second-quarter earnings driven by hit films such as "The Matrix Reloaded" and strength at its popular cable TV networks.

But Eastman Kodak Co. EK.N , the world's top maker of photographic film, reported a sharp drop in second-quarter earnings, hurt by slack sales of film in Asia and the increased usage of digital cameras.

"We're in an earnings-driven market now, and we'll be getting earnings from a cross-section of industries," said Peter Boockvar, equity strategist at Miller Tabak & Co.

"Every group is reporting, so it's going to be a very stock-specific market. It's tough to gauge the general trend, but investors have been punishing those stocks whose earnings have disappointed, and that will continue today."

Standard & Poor's 500 stock index futures for September crept up 0.80 points to 987.60, while Nasdaq futures for the same month were up 2.50 points to 1,265. Futures for the Dow industrials edged up 6 points to 9141.

Stock markets have surged over the last four months as investors bet on a strong pick-up in corporate profits and the economy. This reporting season investors are seeking firm signs that a rebound is under way.

Though companies' results have largely improved from the prior-year period, market watchers say the outlook from many companies is less than outstanding, leaving many unsure if the market can support its recent gains.

In the technology sector, telecommunications equipment maker Lucent Technologies Inc. LU.N on Wednesday posted its 13th straight quarterly loss amid weak spending by telephone companies.

However, Amazon.com Inc. AMZN.O , the No. 1 Internet retailer, on Tuesday reported a narrower quarterly loss due to cost cuts and higher revenue, driven by free shipping offers and lower prices. It also raised its outlook for the year.

In overseas stock markets, European shares edged higher, driven by gains in blue chips like Swiss drugmaker Roche ROCZg.VX and French food maker Danone DANO.PA , which both reporting earnings that met consensus estimates.

The FTSE Eurotop 300 index .FTEU3 rose 0.38 percent to 858 points, while the DJ Euro Stoxx 50 index .STOXX50E gained 0.2 percent to 2,440 points.

Japan's stock market ended higher on Wednesday, as major steel firms led a rebound from the previous day's three-week low. The Nikkei average .N225 gained 1.36 percent on Wednesday, its biggest one-day rise in two weeks, to 9,615.34, and the broader TOPIX index finished up 1.41 percent.

U.S. stocks finished higher on Tuesday, underpinned by solid earnings from companies like Texas Instruments Inc. TXN.N and spurred by news that Saddam Hussein's two sons were killed in a gun battle with U.S. soldiers in Iraq. The news soothed fears the persistent unrest in Iraq could hinder a economic recovery at home.

The Dow Jones industrial average .DJI rose 61.76 points, or 0.68 percent, to 9,158.45, while the broader Standard & Poor's 500 Index .SPX gained 9.31 points, or 0.95 percent, to 988.11. The technology-laced Nasdaq Composite Index .IXIC rose 24.69 points, or 1.47 percent, to 1,706.10.