U.S. Stock-Index Futures Rise as Oil Drops; GM, Yahoo Advance

By Michael Patterson and Lynn Thomasson

July 23 (Bloomberg) -- U.S. stock-index futures climbed as oil extended its weeklong retreat and reports from AT&T Inc. to PepsiCo Inc. to Yahoo! Inc. bolstered expectations that earnings will weather an economic slowdown.

General Motors Corp. rose after crude fell for the sixth time in seven days. Yahoo advanced as second-quarter results met its own targets and the Internet company said profit will increase through 2010. Growth in its wireless business boosted AT&T, the biggest U.S. phone carrier, while higher prices for potato chips helped PepsiCo. Fannie Mae and Freddie Mac climbed before Congress votes today on a rescue plan for the biggest mortgage-finance companies. Shares in Europe and Asia climbed.

``In this weak economy, where people are expecting companies to miss, the fact that companies are doing OK even versus these lowered expectations is really good news,'' Robert Doll, who helps oversee $1.3 trillion as chief investment officer of New York-based BlackRock Inc., told Bloomberg Television. ``You want to be an accumulator of common stocks.''

Futures on the Standard & Poor's 500 Index expiring in September added 6.6 to 1,280.8 as of 8:41 a.m. in New York. Dow Jones Industrial Average futures rose 49 to 11,613. Nasdaq-100 Index futures advanced 11.75 to 1,835.75.

The S&P 500 may extend a 1.4 percent gain yesterday that was sparked by a slump in oil and a late rally in financial stocks. The benchmark for U.S. equities has rebounded 5.1 percent from a 32-month low on July 15 as profits at companies outside the financial industry topped analysts' estimates by 3.5 percent, according to data compiled by Bloomberg.

GM, the biggest U.S. automaker, added 20 cents to $14.52. AT&T climbed 68 cents to $32.50, while PepsiCo rose 81 cents to $67.

Yahoo, Norfolk Southern

Crude oil for September delivery fell 1.8 percent to $125.70, extending its retreat from a July 11 record to 15 percent. Futures declined after forecasters said Hurricane Dolly may miss fields in the Gulf of Mexico and the dollar's rebound curbed investments in commodities.

Yahoo rose 41 cents to $21.81. Chief Financial Officer Blake Jorgensen said partnerships with clients such as Wal-Mart Stores Inc. helped the company meet its targets in the second quarter even as an economic slowdown hurt some customers' advertising budgets.

Norfolk Southern Corp. may advance after saying second- quarter profit rose 15 percent and sales gained 16 percent. Per- share earnings beat the average estimate of 12 analysts compiled by Bloomberg as demand increased for moving coal and agricultural products. The stock didn't trade in Europe.

Fannie Mae gained $1.54 to $14.95 and Freddie Mac added 99 cents to $10.69. The House of Representatives is set to vote today on a rescue plan for government-sponsored enterprises, said Representative Barney Frank, a Massachusetts Democrat who chairs the House Financial Services Committee.

Lehman, Costco

Lehman Brothers Holdings Inc. added 40 cents to $20.60. The securities firm shaken by speculation it's losing clients may sell its Neuberger Berman money-management unit or consider ``sizeable'' asset sales, UBS AG analyst Glenn Schorr wrote in a note to clients.

Costco Wholesale Corp., the nation's largest warehouse-club chain, dropped $7.15 to $64.85. Fourth-quarter earnings per share are expected to miss the $1 consensus estimate of analysts surveyed by First Call after surging energy prices increased the retailer's costs and made selling gasoline less profitable, Costco said. The company also said it plans to buy back an extra $1 billion of shares.

Broadcom Corp. lost 84 cents to $26.80. The maker of chips for Nintendo Co.'s Wii video-game console said inventory is rising and that expenses may increase this quarter.

E*Trade Financial Corp. declined 60 cents to $3.55. The fourth-largest online brokerage by client assets posted a wider- than-estimated second-quarter loss after its provision for bad loans surged more than 10-fold and trading commissions fell.

WaMu Earnings

Washington Mutual Inc. slipped 12 cents to $5.70. The biggest U.S. savings and loan reported a $3.3 billion second- quarter loss on uncollectible loans as a record number of borrowers were unable to keep up with mortgage payments. The company said mortgage-related losses through 2011 will be at the high end of its previous forecast of $12 billion to $19 billion.

John Paulson, the money manager whose wagers against the U.S. housing market helped him earn an estimated $3.7 billion last year, is starting a hedge fund to provide capital to financial firms hurt by mortgage writedowns. Paulson aims to open the fund by December, according to two people with knowledge of the matter. Paulson, whose firm oversees $33 billion, declined to comment.

VMware Forecast

VMware Inc. dropped $5.37 to $32.60. The biggest maker of software that lets computers run multiple operating systems cut its annual sales forecast amid competition from Microsoft Corp. and slowing technology spending.

EMC Corp., the world's largest storage-computer maker, said second-quarter profit rose 13 percent on increasing sales of software and services. The shares added 34 cents to $12.80.

Pfizer Inc. climbed 58 cents to $18.93. The biggest drugmaker reported second-quarter profit excluding some items that beat analysts' estimates as the company cut costs and boosted sales outside the U.S., where it benefited from favorable exchange rates.

The Federal Reserve releases its regional economic survey, known as the Beige Book, at about 2 p.m. New York time. The report's anecdotes are gathered through hundreds of telephone calls, news clippings and personal contact by the staff of the 12 Fed banks, whose districts cover all 50 U.S. states.

The S&P 500 is still 18 percent below its October record, having pared a decline of as much as 22 percent from that peak.

Except for Canada, all of the 23 developed markets in the MSCI World Index experienced bear market plunges of at least 20 percent this year as global credit losses exceed $452 billion and oil trades near a record.

``We have passed the market bottom,'' Max King, an investment strategist at Investec Asset Management, said in an interview on Bloomberg Radio. ``I would expect 20 percent returns plus over the next 12 months.''

To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.