microsoft send futures higher ahead of gdp report.

At the gates of a gain
Microsoft guidance and results, overseas markets send futures higher ahead of GDP report.
January 27, 2006: 8:05 AM EST


NEW YORK (CNNMoney.com) - Solid earnings and guidance from Microsoft, coupled with a strong rally in overseas stock markets, were poised to lift U.S. stocks early Friday.

U.S. stock futures were up sharply, indicating a higher opening for stocks.

After the market close Thursday, Microsoft (Research) posted earnings that essentially met forecasts and issued positive guidance for the current period. It also said it had taken steps to increase production of its Xbox 360 video game player, whose supply constraints have crimped earnings in the last two quarters. Shares of Microsoft were up almost 4 percent in European trading.

Before the bell Friday, the nation's largest consumer products maker, Procter & Gamble, beat earnings forecasts and raised its guidance for 2006. Shares of the Dow component gained 1 percent in Europe following the report.

"Earnings are have been for the most part pretty darn good, unless you're a Detroit automaker," said Jason Leander, vice president at Rothschild Investment in Chicago. "This market has some real legs. I think we're seeing some good carry over into today."

Major markets in Asia closed sharply higher Friday as Japanese markets posted a 3.4 percent gain after strong results from electronics and entertainment conglomerate Sony (Research). Major European markets were close to 1 percent higher in early trading, climbing to their highest levels since August 2001.

The good earnings news allowed investors to look past oil prices jumping above the $67 a barrel mark. The March light crude futures contract for NYMEX gained 89 cents to $67.09 a barrel in electronic trading, The March contract for Brent crude was up 87 cents to $65.79.

At 8:30 a.m. ET, investors and economists will get the first reading on how much U.S. economic growth slowed at the end of last year. Economists are forecasting that the gross domestic product, the broadest measure of the nation's economic activity, rose at an annual 2.8 percent rate in the fourth quarter, down from the 4.1 percent growth pace in the third quarter.

Leander said he doesn't believe even a weaker than forecast GDP report will spook stocks at this point.

"We're seeing growth in a lot of other measures," he said. "I think you'll see an initial reaction (to a weak GDP report). But I don't think you'll see people pulling up stakes and running out."

At 10 a.m. ET, the government reports on December new home sales. Economists are looking for those sales to slow to an annual pace of 1.23 million in the month from 1.25 million in November. Earlier in the week, the National Association of Realtors reported the third straight month of slowing existing home sales. New home sales are seen as a more leading indicator of sales.

Treasury prices were slightly higher, cutting the yield on the 10-year note to 4.50 percent from 4.51 percent late Thursday. The dollar was up against both the euro and the yen.