Stocks Hold Small Gains Ahead of Earnings

Oil falls while a Fed official vows price vigilance.

Author:: Robert Holmes
Publish date:: Jan 24, 2006 6:51 AM EST

Stocks were modestly higher ahead of a major day for corporate earnings, as traders welcomed lower oil prices and a potential deal in the movie sector.

Index futures recently showed the

S&P 500

trading about 2 points above fair value, while the Nasdaq 100 was set for a 1-point gain. The 10-year Treasury bond was down 3/32 in price to yield 4.37%, and the dollar was higher against the yen and euro.

Last night,

Federal Reserve

Governor Mark Olson said the U.S. central bank is "watching very carefully the potential impact of inflation, and especially any price increases that would pass through to core inflation."

Oil continued to ease from five-month highs, with crude for March delivery falling 72 cents to $67.38 a barrel. The contract lost 38 cents on Monday as comments from two OPEC officials suggested the cartel won't cut production at a meeting next week in Vienna.

Overseas markets were mixed, with London's FTSE 100 recently down 0.2% to 5649 and Germany's Xetra DAX losing 5354. In Asia, Japan's Nikkei rose 1.9% overnight to 15,649, while Hong Kong's Hang Seng gained 0.4% to 15,531.

Stocks rose modestly in Monday but did little to make up ground in Friday's 2% rout. The

Dow Jones Industrial Average

rose 21 points to 10,689, while the S&P 500 gained 2 points to 1264 and the

Nasdaq Composite

added about a point to 2248.

Much of Tuesday's tone will be set by earnings, including reports from

(MMM) - Get Report

McDonald's

(MCD) - Get Report

Lucent

(LU)

and

Johnson & Johnson

(JNJ) - Get Report

Last night,

Texas Instruments

(TXN) - Get Report

said fourth-quarter earnings rose 34% from a year ago to $655 million, or 40 cents a share, while sales rose 14% to $3.59 billion. Analysts had forecast 39 cents a share and $3.64 billion.

For the first quarter ending in March, Texas Instruments sees sales of $3.11 billion to $3.38 billion and EPS of 29 cents to 33 cents. The sales estimate excludes a business line T-I is selling and isn't comparable to the Thomson First Call estimate of $3.46 billion.

E*Trade

(ET) - Get Report

said fourth-quarter earnings rose 44% to $129 million, or 32 cents a share, while adjusted earnings of 30 cents a share beat estimates by a penny. Revenue rose 19% to $478.8 million, about $6 million short of estimates.

A day after

Ford

(F) - Get Report

said it would cut up to 30,000 jobs,

DaimlerChrysler

(DCX)

is outlining a management winnowing that could cut its executive ranks by 20%. The automaker hopes to save $1.8 billion a year.

And

Disney

(DIS) - Get Report

reportedly could announce an acquisition of animation studio

Pixar