* Bank of America climbs in premarket after earnings
* Empire State manufacturing, PPI data due
* Futures up: Dow up 39, S&P up 3.4 Nasdaq up 13
By Chuck Mikolajczak
NEW YORK, Jan 15 (Reuters) - U.S. stock index futures rose on Wednesday, indicating the S&P 500 will build on its biggest gain in nearly a month, after earnings from Bank of America and ahead of data on inflation and manufacturing.
Bank of America shares climbed 2.7 percent to $17.22 before the opening bell after the second-largest U.S. bank reported an eight-fold jump in fourth-quarter profit, driven by a steep fall in provisions to cover bad loans.
Investors have recently been concerned that stock prices may have become extended. The S&P 500’s forward price to earnings ratio is at its highest level in nearly seven years. The benchmark S&P 500 surged about 30 percent in 2013.
“We’ve been in a bit of a battle between the urge of some investors to take some profits here and the upcoming earnings announcements and whether they can support the now-higher valuations - the next two weeks are really critical to investors deciding whether earnings are sufficient to justify prices,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.
“It’s not just enough for the economy to recover, corporate earnings have to recover as well to match the higher valuations that 2013 brought.”
Economic data due at 8:30 a.m. EST (1330 GMT) includes Empire State manufacturing survey for January and the producer price index for December. The New York Fed data is expected to show a reading of 3.75 while producer prices are expected to rise 0.4 percent.
Later in the session at 2:00 p.m. (1900 GMT), the Federal Reserve will release its Beige Book of economic conditions.
S&P 500 futures rose 3.4 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 39 points and Nasdaq 100 futures added 13 points.
The S&P 500 rose 1.1 percent on Tuesday, its biggest climb since Dec. 18, as a strong December retail sales reading eased concerns that economic growth might be slowing and stocks may be expensive.
Other S&P 500 companies scheduled to report earnings on Wednesday include CSX Corp and Kinder Morgan Inc .
General Motors Co said it will pay the first quarterly dividend on its common stock in almost six years. While the automaker’s new executive team said while it expects a slight uptick in pretax profits this year, margins likely would remain flat until 2015. GM’s shares lost 1.2 percent to $39.55 in premarket trading.
Chelsea Therapeutics International Ltd surged 161.7 percent to $6.02 in premarket after an advisory panel to the U.S. Food and Drug Administration concluded on Tuesday a drug to treat a rare form of low blood pressure made by the company is effective enough to warrant regulatory approval.
European shares rose to fresh 5-1/2 year highs, buoyed by a better global growth outlook from the World Bank, with gains supported by easing regulatory concerns over banks in the euro zone.
Asian share markets were mostly higher as the World Bank upgraded its outlook for the global economy while the dollar extended gains in the wake of surprising strength in U.S. consumer spending.