By Tomi Kilgore
U.S. stock futures traded near the flat line, as investors
paused from the recent string of gains to assess a heavy dose of
earnings news.
About 90 minutes ahead of the open, Dow Jones Industrial Average
futures ticked up nine points, or 0.1%, to 16380.
S&P 500 index futures nudged higher by one point, or 0.1%,
to 1865 and Nasdaq-100 futures added seven points, or 0.2%, to
3558. Changes in stock futures don't always accurately predict
stock moves after the opening bell.
On Monday, the S&P 500 rose 0.4% to post a fifth-straight
gain, the longest winning streak since the five-day stretch ending
Oct. 22. The Nasdaq also extended its winning streak to five
sessions, the longest since Feb. 18.
The S&P 500 has gained 3.1% in five sessions since closing
at a two-month low, and is now just 1% away from its April 2 record
closing high of 1890.90.
The advance has soothed fears that a selloff in highflying
social-media and technology stocks earlier in the month would spill
over to the broader market. Some of those hardest hit stocks were
among the biggest gainers during the market's recent bounce.
In early stock movers, Netflix rallied 7.9% in premarket trading
after the video-streaming company reported late Monday
first-quarter earnings that exceeded expectations, provided a
second-quarter outlook above current analyst projections, and said
it plans to increase prices for new members.
Through Monday, the stock has gained 6.7% over the last week.
Before that bounce, the stock had dropped 24% since closing at a
record high of $454.98 on March 4.
Peter Cardillo, chief market economist at broker-dealer Rockwell
Global Capital, said the recent improvement in economic data and
earnings that have generally been better than forecast should
continue to support the bounce in stocks.
"By and large, earnings season so far has been surprisingly
good, and companies are starting to look at better times ahead,"
Mr. Cardillo said. "Most clients are realizing, the economy is
looking better and Corporate America will continue to do well.
They're not overly bullish, but that is a good thing."
Within the Dow, Travelers Cos. gained 0.4% after the insurer
topped first-quarter earnings forecasts and raised its quarterly
dividend by 10%.
United Technologies tacked on 0.9% after beating first-quarter
earnings and revenue estimates and boosting the lower end of its
2014 profit outlook.
McDonald's added 0.6% after reporting disappointing
first-quarter earnings, but a rise in global same-store sales.
With 19% of the S&P 500 having reported first-quarter
results through Monday, overall earnings per share are expected to
decline 1.2% from year-ago levels, according to FactSet, which is a
slight improvement from when earnings season started two weeks ago.
Many analysts are attributing the decline to harsh weather during
the quarter.
On the economic calendar, existing home sales for March, due at
10 a.m. Eastern, are expected to decline 0.7% on the month to a
seasonally adjusted annualized rate of 4.57 million.
The yield on the 10-year Treasury note inched up to 2.724% from
2.719% late Monday.
Crude-oil futures eased 0.8% to $102.86 a barrel, after settling
Monday at a seven-week high, while gold futures added 0.2% to
$1,290.90 an ounce. The dollar lost some ground against the euro
and the yen.
European markets were broadly higher, with the Stoxx Europe 600
up 1.1%, as a rally in pharmaceutical stocks set a positive tone
for investors returning from the four-day Easter weekend.
The U.S.-listed shares of GlaxoSmithKline gained 4% and those of
Switzerland's Novartis rose 1.2% after the drug giants announced a
series of transactions that will reshape both companies, including
Novartis' $14.5 billion purchase of GlaxoSmithKline's oncology
unit.
In addition, it was Europe's first chance to react to news
reports that AstraZeneca had been approached by rival drug maker
Pfizer about takeover talks. On Monday, AstraZeneca's U.S.-listed
shares surged 8.8%, but are down 1.9% in Tuesday's premarket.
Asian markets were mixed, with China's Shanghai Composite edging
up 0.3% and Japan's Nikkei Stock Average slipping 0.9%.
In other corporate news, Allergan surged 18% after Valeant
Pharmaceuticals submitted a $46 billion merger proposal. The buyout
bid is backed by Bill Ackman's Pershing Square Capital Management,
which owns a 9.7% stake in Allergan. Valeant's stock rallied
5.6%.
Xerox slumped 4.1% after providing a disappointing
second-quarter earnings outlook, while Comcast gained 0.7%,
Harley-Davidson climbed 6.8% and Lockheed Martin edged up 0.3%
after exceeding first-quarter earnings estimates.
Write to Tomi Kilgore at tomi.kilgore@wsj.com