Wall Street set to rise on commodities, M&A

Wall Street set to rise on commodities, M&A
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First Published: Tue, Sep 08 2009. 06 09 PM IST
Updated: Tue, Sep 08 2009. 06 09 PM IST
New York: Wall Street was set to open nearly 1% higher on Tuesday as rising commodity prices and an uptick in merger and acquisition activity fueled hopes the economy is strengthening.
Kraft Foods Inc said it was intent on pursuing Britain’s Cadbury Plc, which rejected a bid from the US company. Analysts said Kraft, North America’s biggest food group, might have to raise its £10.2 billion ($16.7 billion) offer by up to 40%. Kraft’s shares were down 5.7% at $26.50 in premarket trading.
“You get some M&A activity, and the market perceives that as potentially the start of more,” said Marc Pado, US market strategist at Cantor Fitzgerald & Co in San Francisco.
“It’s been talked about a lot that you should see as you come out of the bottom of a recession those that are in good shape gobbling up those that are struggling.”
Natural resource shares could see a boost as the price of spot gold rose above $1,000 an ounce to its highest level since March 2008 on a wave of technical momentum and dollar weakness.
Energy shares could benefit as oil futures jumped 3.5% to top $70 a barrel ahead of an Opec meeting. Analysts said no change in output limits was expected.
“Commodities are again becoming a barometer for the market,” said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.
“Strong commodities suggest a healthy economy, and therefore stocks will follow.”
Shares of General Electric Co gained 4% to $14.43 premarket after J.P. Morgan Securities upgraded the stock to “overweight” from “neutral,” saying it was one of the last stocks for which a little good news could still go a long way.
S&P 500 futures rose 9.80 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 added 78 points, and Nasdaq 100 futures climbed 14 points.
Shares of iPod maker Apple Inc rose 1.5% to $172.80 ahead of the opening after Morgan Stanley raised its price target to $200 from $195. The firm also raised the US systems and PC hardware sector to “attractive” from “in line.”
Asian markets rose, with China’s benchmark Shanghai Composite closing 1.7% higher after a senior official said China’s economy is seeing more signs of economic strength. US markets have taken a cue from Chinese stocks after a recent correction in Shanghai stocks raised concerns a selloff could spill over to Wall Street.
US stocks closed higher on Friday as investors focused on the bright side of a mixed payrolls report that showed smaller-than-expected job cuts in August, although the unemployment rate hit a 26-year high. US markets were closed on Monday for the US Labor Day holiday.
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First Published: Tue, Sep 08 2009. 06 09 PM IST
More Topics: Markets | USA | Stocks | Wall Street | Kraft Foods Inc |