Stocks Face More Early Gains

The fourth-quarter GDP report looms.
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Bulls continued to romp on Wall Street Friday as solid earnings guidance from

Microsoft

(MSFT) - Get Report

and huge sessions overseas helped expand the risk tolerance.

Index futures recently showed the

S&P 500

trading 5 points above fair value, while the Nasdaq 100 was set for a 17-point surge. The 10-year Treasury bond was unchanged in price to yield 4.51%, while the dollar was flat against the yen and euro.

The higher indications reflected bullish bets ahead of the government's advance report on fourth-quarter gross domestic product. Economists are currently targeting a 2.8% rise in the economic growth gauge, with the GDP deflator, a key inflation reading, expected to come in at plus-2.6%.

The futures strength follows the market's best session in two weeks, with the

Dow Jones Industrial Average

and

Nasdaq Composite

both gaining nearly 1% and the S&P 500 adding 0.7%.

Oil rose as traders digested a warning from the U.S. government that Iran's nuclear ambitions will be referred to the U.N. Security Council. In electronic trading, crude for March delivery was up 77 cents to $67.03 a barrel, after adding 41 cents on Thursday.

Overseas markets were sharply higher, with

Sony's

(SNE) - Get Report

earnings driving Japan to its best gain in more than three years. The Nikkei rose 3.6% overnight to 16,461, while Hong Kong's Hang Seng rose 1.5% to 15,753.

In Europe, London's FTSE 100 rose 1% to 5780, while Germany's Xetra DAX rose 1.1% to 5608. The DAX is up about 5% this week and is poised for its best close since 2001.

Helping drive the good cheer is Microsoft, whose second-quarter earnings and revenue matched Wall Street estimates and whose guidance looked strong. The company earned $3.65 billion, or 34 cents a share, in the quarter, while sales rose 9% to $11.84 billion. Adjusted for a gain, earnings matched the 33-cent consensus estimate.

To view David Peltier's video take on today's premarket action, click here

.

For the third quarter, Microsoft sees earnings of 32 cents or 33 cents a share on sales of $10.9 billion to $11.2 billion. Analysts were forecasting earnings of 33 cents a share on sales of $10.99 billion.

Other tech companies reporting late Thursday were

KLA-Tencor

(KLAC) - Get Report

, which said earnings fell in its second quarter but beat estimates, and

Sandisk

(SNDK)

, which beat estimates by 6 cents but also set price cuts that sank the stock in late trading.

The market had no second thoughts about

Broadcom

(BRCM)

, which saw its shares vault 16% after it reported adjusted earnings of 50 cents a share and sales of $820.6 million. Wall Street was forecasting earnings of 44 cents a share on $780 million in sales.

Medical device maker

Stryker

(SYK) - Get Report

said fourth-quarter earnings rose 22% to $198 million, or 48 cents a share, matching estimates. For 2006, the company sees earnings of $2.02 a share, short of the $2.09-a-share estimate.