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US stock futures rise on earnings, deal news

Mon, 10/24/2011 - 5:45am
STAN CHOE - AP Business Writer - Associated Press

U.S. stock futures rose Monday after Caterpillar raised its profit forecast on expectations that the economic recovery will continue and companies announced a flurry of takeovers.

Investors are still worried about Europe's debt problems, which have helped drag global stocks up and down the last two years. European leaders said they made progress at a weekend summit, but they likely won't unveil concrete plans to help resolve the crisis until Wednesday.

But even with the global economic worries, Caterpillar and other U.S. companies are still reporting bigger profits. "Although there is a good deal of economic and political uncertainty in the world, we are not seeing it much in our business at this point," Caterpillar Chief Executive Doug Oberhelman said.

The maker of construction equipment said its profit rose 44 percent in the latest quarter from a year earlier. It shares rose 5 percent in premarket trading.

Caterpillar joins McDonald's Corp. and other U.S. companies that have reported stronger third-quarter earnings. Those reports helped the Dow Jones industrial average last week to rise for the third straight week. The Standard & Poor's 500 index finished the week at its highest level since Aug. 3, before Standard & Poor's downgraded the U.S. credit rating on Aug. 5 and helped trigger big swings in global markets.

Analysts expect companies in the S&P 500 to report total earnings growth of 14 percent for the third quarter, according to FactSet.

Other big companies expected to report earnings results this week include UPS Inc., Ford Motor Co. and Procter & Gamble.

Analysts expect S&P 500 companies to say their revenue rose 10 percent last quarter. But their expenses likely climbed too. Higher costs for raw materials helped drag down profit for Kimberly-Clark Corp. by 8 percent. The maker of Huggies and Kleenex fell 1 percent in premarket trading.

A flurry of corporate deals helped lift stock futures.

RightNow Technologies Inc. rose 19 percent ahead of the bell after Oracle said it will buy the tech service company for about $1.5 billion.

HealthSpring rose 33 percent after Cigna said it will buy the health insurer for about $3.8 billion in cash.

Mattel rose 1.6 percent after it agreed to buy Hit Entertainment, the owner of the Thomas & Friends and Barney brands, for $680 million in cash.

Asian and European markets rose earlier Monday after Japan said its exports grew for a second straight month in September and a report showed China's industrial production returned to growth in October. Japan's Nikkei 225 index rose 1.9 percent.

About half an hour ahead of the opening, Dow Jones industrial average futures rose 43 points, or 0.4 percent, to 11,800. S&P 500 index futures rose 2.90, or 0.2 percent, to 1,238.10. Nasdaq 100 futures rose 8, or 0.3 percent, to 2,342.25.

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