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Wall St set to open higher on German vote, data

Wall St set to open higher on German vote, data
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First Published: Thu, Sep 29 2011. 06 54 PM IST
Updated: Thu, Sep 29 2011. 06 54 PM IST
New York: US stocks were poised for a higher open on Thursday after Germany’s lower house approved new powers for the euro zone’s crisis fund and US economic data was stronger than forecast.
Investors had worried about funding a series of bailouts for countries like Greece, but enough German lawmakers from the centre-right coalition voted in favour to give Chancellor Angela Merkel the number she needed to pass crucial euro zone policy without opposition help.
The US labor department said applications for unemployment benefits fell by 37,000 to a seasonally adjusted 3,91,000 in the week ending 24 September from an upwardly revised 4,28,000 the prior week and better than the 4,20,000 estimate.
The commerce department said in its third and final estimate for the quarter that gross domestic product grew at annual rate of 1.3% up from the previously estimated 1% and a touch above economists’ expectations for a 1.2% pace.
“The news out of Germany helped as well -- that gave (the market) a lift to start and obviously getting good news on the US front magnifies that,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
Also supporting futures, Federal Reserve chairman Ben Bernanke said on Wednesday the central bank might need to ease monetary policy further if inflation or inflation expectations fall significantly.
“The Fed doesn’t really talk about this, but their biggest issue is deflation, and they continue to monitor that, so if he sees any sort of deflationary spiral beginning, maybe the helicopters are going to come out and start flooding us with money,” said Kim Caughey Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
Bank shares rose in premarket, with Bank of America Corp up 3.4% to $6.37 and Citigroup up 3.2% to $26.76.
S&P 500 futures rose 17.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures gained 159 points, and Nasdaq 100 futures added 39.25 points.
Market volatility is likely to remain high as traders react to European headlines and attempt to gauge the commitment of governments and institutions as they work to prevent a Greek default.
At 07:30 pm, the National Association of Realtors issues pending home sales for August. Economists expect a 1.8% drop, compared with a 1.3% drop in the previous month.
Materials stocks rebounded after Wednesday’s selloff in commodities over global demand worries. Freeport-McMoRan Copper & Gold Inc advanced 3.5% to $33.44 and Alcoa Inc gained 2.9% to $10.25.
Advanced Micro Devices Inc slumped 10.6% to $5.50 in premarket after the chipmaker cut its third-quarter revenue and gross margin forecast, citing manufacturing issues at its German foundry supplier.
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First Published: Thu, Sep 29 2011. 06 54 PM IST
More Topics: Markets Update | USA | Stocks | Dow Jones | Nasdaq |