Wall St investors prepare for earnings season

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Equities on Wall Street were mixed overnight as investors awaited fresh catalysts such as the start of the US earnings season next week.

In early afternoon trading on Wall Street, the Dow Jones Industrial Average crept 0.06 per cent higher. The Standard & Poor's 500 Index fell 0.13 per cent and the Nasdaq Composite Index lost 0.25 per cent.

Investors were clearly on the sidelines. By midday the volume was the lowest so far this year and followed the lowest weekly volume of 2011 last week, according to Reuters.

There are positive indicators. S&P 500 earnings are poised to surpass the 2007 peak of US$90 a share in the third quarter after surging from US$7 in March 2009, the quickest recovery since at least 1900, according to data from S&P and Yale University's Robert Shiller compiled by Bloomberg.

The gap between projected 12-month profits and average earnings over the last 10 years is set to widen the most since 1951, the data compiled by Bloomberg show.

Meanwhile, Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, told Reuters that earnings season would likely push the S&P 500 to 1,400 by mid-May.

"If we make a successful break from here, I think you've got the 1,400 range and I think that's probably likely during the final seasonally favourable push," he said.

Today, General Dynamics shed more than 5 per cent after one of its Gulfstream Aerospace jets crashed on a test flight, killing four.

In Europe, the Stoxx 600 Index advanced 0.1 per cent.

In the latest big M&A deal, Belgium's Solvay SA agreed to buy Rhodia SA for 3.4 billion euros (US$4.8 billion).

The euro was last at US$1.4238, up 0.1 per cent, as investors expect the European Central Bank to lift interest rates this week, though that move has largely been priced in already.

"It's difficult to sell the euro going into Thursday's ECB meeting," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, told Reuters.

"But there is limited upside and we would need to hear surprisingly hawkish comment from ECB president Jean-Claude Trichet for a sustainable move higher in the euro."

The US dollar rose 0.11 per cent against a basket of major currencies.

Oil extended recent gains amid a combination of continued turmoil in the Middle East, keeping alive supply concerns, and increasingly positive signs on the global economic recovery, particularly in the U.S., which would bolster demand.

Brent crude for May rose US$1.58 to US$120.28 a barrel by midday EDT.

US crude climbed as high as US$108.78, the highest intraday price since September 2008, before giving up some of its gains.

"Brent is up on Libya, Yemen unrest and the Nigerian election," Phil Flynn, analyst at PFGBest Research in Chicago, told Reuters.

"US crude is hesitant because there is still worry that the Federal Reserve might be nearing a rate hike or tighter policy, which would lower liquidity and demand and strengthen the [U.S.] dollar," he said.