Bulls are hoping more positive data on the economy will provide a second straight session of strength. On Thursday, the major market indices rallied with the Dow seeing its largest gain in more than three months. A stronger than expected GDP figure for the third quarter provided traders with a reason to buy, yet stocks are still negative for the week. The bulls are hoping for strength to end the week so that October will finish in the black.

Stocks in Asia rallied sharply overnight following the lead of the U.S. The Nikkei in Japan rose 1.45 percent with the Hang Seng up 2.29 percent. Third quarter GDP in the U.S. rose 3.5 percent, which was above expectations and the first quarter of growth since the second quarter of 2008. Samsung also reported strong earnings for the third quarter with the company seeing stronger operating margins in its semiconductor business. However, the company did provide a disappointing outlook for the fourth quarter.

Oil prices have slipped in early trading Friday after tacking on three percent yesterday. ExxonMobil (XOM) reported earnings Thursday morning that were below forecast, though the oil giant still made nearly $5 billion in the third quarter. This morning, Chevron (CVX) will report its quarterly results with analysts looking for earnings per share of $1.47. CVX shares closed Thursday's session at $77.95. The stock has seen solid gains in October, rising from a price near $68 at the beginning of the month.

Earnings will get a lot of attention Friday, but the economy will also remain a focus. Economic news dominated the headlines on Thursday thanks to the GDP and there are several key repots due out this morning as well. Economists are looking for a flat reading in personal incomes and expect a 0.5 percent drop in consumer spending. If this holds true, it would be the first drop in spending since April.

Earlier in the week, the Conference Board reported a surprise drop in its confidence index. This morning, the Reuter's/University of Michigan report is expected to show a mild gain to 70.0 for the month. This would be down from September's reading of 73.5, but up from the 69.4 reported mid-month. Sentiment has improved of late, but remains well below historic levels thanks to a tough jobs market.

Other data due out this morning includes the employment cost index, which is expected to show a 0.5 percent rise for the third quarter, and the Chicago PMI. Economists are looking for a reading of 48.5, up from 46.1 in October. August saw the reading reach the key point of 50, but this strength didn't hold. Nonetheless, manufacturing activity in the Chicago area has come well off its lows below 35 experienced at the end of 2008 and early 2009.

Overall, unless we see another strong rally Friday, the major market indices will close negative for the week. The Dow (^DJI) and S&P 500 (^SPX) look poised to finish October with gains, but the Nasdaq (^IXIC) will need to see some strength move into the black for the month.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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