Stock Futures Point Higher as European, Japanese Markets Advance

NEW YORK ( TheStreet) -- Stock futures were pointing upward Tuesday, signaling that the S&P 500 will stay near record-high levels.

"While stocks are continuing to advance, the composition of the rally has started to change," Russ Koesterich, global chief investment strategist at New York-based BlackRock, said in a note. He said that large- and mega-cap stocks are now outperforming smaller-caps, "a trend we expect will continue."

The FTSE 100 in the U.K. was rising 0.4% and the DAX in Germany was increasing 0.88%.

The Hong Kong Hang Seng index closed up 0.58% Tuesday and the Nikkei 225 in Japan surged by 3.55% after re-opening from a four-day public holiday, giving investors a chance to digest the lower yen and better-than-expected jobs numbers on Friday.

Asian shares got a boost Tuesday after Australia's central bank slashed its benchmark interest rate by a quarter of a point to a record low of 2.75%. The Bank of England's Monetary Policy Committee is expected on Thursday to leave its stimulus program on indications that the economy there is improving.

Koesterich added that some of the more expensive defensive sectors of the market such as the utilities sector are underperforming, while the technology sector has experienced better results and still looks inexpensive.

"As we indicated, one of the reasons U.S. stocks have been performing so well recently is that the Federal Reserve remains extremely aggressive in terms of its easing programs."

Futures for the S&P 500 were rising 2.25 points, or 3.05 points above fair value, to 1,615.75. The index has climbed more than 13% so far this year, eclipsing last year's gains in just five months.

Market strategists surveyed by TheStreet generally lean towards further gains in stock markets even as they acknowledge scenarios for a developing bubble.

They attribute market gains to the unquenchable thirst for yield and central banks being eager to keep liquidity high as the main reason stocks are poised to keep moving higher. Opinions were mixed on the impact of corporate profits on the market direction.

HSBC ( HBC) was adding 2.31% to $57.09 in premarket trading after the British bank posted first-quarter earnings that nearly doubled as the company cut costs and bad debts declined.

Electronic Arts ( EA) was popping 2.79% to $18.80 in premarket trading Tuesday after media giant Walt Disney ( DIS) announced Monday that it entered a multi-year deal with the company to develop new "Star Wars" video games. Disney shares were up 0.58% to $65.44.

Electronic Arts is expected by analysts on Tuesday to report after the close fiscal fourth-quarter profit of 57 cents a share on sales of $1.03 billion. Walt Disney is expected by Wall Street on Tuesday to post fiscal second-quarter earnings of 77 cents a share on revenue of $10.49 billion after the market close.

MBIA ( MBI) was gaining 3.43% to $14.78 after Bank of America ( BAC) settled a longstanding litigation with the company, agreeing to pay $1.6 billion to MBIA and take a 4.9% stake in the insurer. Bank of America shares were rising 0.47% to $12.94.

First Solar ( FSLR) was slipping 2.29% to $46.60 after posting on Monday first-quarter adjusted earnings of 69 cents a share; analysts were looking for profit of 75 cents. Still, sales rose 52% to $755 million, topping estimates, and the company swung to profit.

Futures for the Dow Jones Industrial Average were gaining 34 points, or 34.11 points above fair value, to 14,940.

Futures for the Nasdaq were up 5.75 points, or 4.14 points above fair value, to 2,953.25.

The Federal Reserve releases the consumer credit report at 3 p.m. EDT. Economists surveyed by Thomson Reuters on average are predicting a rise of $16 billion in March after an increase of $18.1 billion in February.

June gold futures were plunging $7.80 to $1,460.20 an ounce. Light sweet crude oil for June delivery was off 39 cents to $95.77 a barrel.

The benchmark 10-year Treasury was down 4/32, lifting the yield to 1.779%. The dollar was falling 0.17% to $82.17 according to the U.S. dollar index.

Written by Andrea Tse in New York

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