US stocks set to rise

Stocks were expected to tick up as optimism about the earnings season kept investors in a buying mood amid a flood of reports from marquee names like Procter & Gamble Co. and McDonald's Corp.

Investors have been turning their focus away from the war in Iraq in recent days, and instead have been seeking signs that the economy and corporate earnings are turning the corner.

"Earnings are, on the whole, coming in better than expected, and the thought is that if companies can deliver in a difficult economic environment, they're going to be highly leveraged to any uptick in the economy," said Peter Boockvar, equity strategist at Miller Tabak & Co.

Weaker oil prices were also giving investors hope that corporate earnings will not be hindered by high energy costs.

The market's reaction was muted to a report showing that US consumers increased their spending in March at the fastest pace in three months. Wall Street has a slew of economic data to sort through this week, including the closely watched monthly jobs report on Friday.

"There was no major surprise regarding personal income figures," said John Person, head financial analyst, Infinity Brokerage Services. "The market is looking ahead to earnings which this week we will have from major headliner corporations, including Dow components such as McDonald's, Exxon and Dupont."

Standard & Poor's 500 stock index futures for June were up 3.10 points at 901.70, while Nasdaq futures for the same month were up 4 points at 1,089.50.

Relief that the Iraq conflict appears virtually at an end, along with first-quarter earnings that have, on average, surpassed Wall Street's expectations, have prompted a buying spree among investors in recent weeks.

The Standard & Poor's 500 index, which hit a three-month peak last week, has climbed more than 12 per cent from the 2003 low it hit in mid-March.

In the latest economic data, the government reported consumer spending grew at a seasonally adjusted 0.4 per cent last month as better weather and a pick-up in income growth helped bring them back to shopping malls and car dealerships. The gain came in just shy of private economists' expectations for a 0.5 per cent rise.

The report also showed Americans' incomes rose by 0.4 per cent in March, matching economists expectations.

Wall Street's mood is likely to continue to hinge on corporate earnings as results flood in.

Procter & Gamble, the maker of Tide laundry detergent and Pampers diapers, reported that quarterly profit rose 23 per cent, boosted by strong sales of drugs and Crest dental products and by favourable foreign exchange rates.

Procter & Gamble Co. inched up to $90 before the bell after closing at $89.14.

McDonald's Corp., the world's largest restaurant company, said quarterly net rose even as it was pressured by increased US competition and the slowing global economy.

AutoNation Inc., the nation's largest dealer of new and used vehicles, said yesterday that its first quarter earnings jumped to $185 million, partly due to additional income from a tax settlement.

Humana Inc., a health-care insurance company, said yesterday its quarterly net profit fell as it took a restructuring charge to write down the value of equipment after it consolidated its customer service centres.

Meat company Tyson Foods Inc. said its quarterly earnings were higher than a year ago, thanks to a $94 million gain received in connection with vitamin antitrust litigation.

International Flavours and Fragrances, one of the world's largest fragrance makers, reported quarterly earnings fell because of severance costs from its restructuring.

Aerospace and industrial products maker Goodrich Corp. yesterday said quarterly earnings rose but added it would cut 1,700 jobs as the company struggles with a continuing downturn in global commercial aerospace markets.

As of Friday, earnings for the first quarter were expected to show a gain of 11.7 per cent, with the companies that had issued their results by that point beating expectations by 6.8 per cent, according to tracking company Thomson First Call.

Shares of chip companies could be in focus after industry reports showed global semiconductor sales growth slowed to 13 per cent year-on-year in March from 17.9 per cent in February as the industry suffers from oversupply and price pressure.

The brokerage sector also received attention with US market regulators who unveiled a $1.4 billion legal settlement with Wall Street firms yesterday, including fraud charges and detailed allegations of misconduct by stock research analysts, sources familiar with the situation said.