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U.S. stocks seen higher at open, but trade thin
By Haitham Haddadin
NEW YORK, Aug 18 (Reuters) - U.S. stocks were expected to open higher on Friday but trade was seen range-bound and volumes thin as investors tread cautiously ahead of next week's meeting of the Federal Reserve's interest rate-setting committee.
``We've got the (Fed) meeting Tuesday so why would you make a big bet in the middle or the end of the summer on a Friday? We'll probably trade sideways,'' said Art Hogan, chief market analyst at Jefferies & Co. in Boston.
``My bet is that we trend higher (at the open) but on very anaemic volume. We'll have a lot of people sidelined waiting for the Tuesday meeting,'' Hogan added.
With more than an hour to go before the opening bell, the Standard & Poor's 500 index futures for September were up 2.00 points at 1,505.60 while the Nasdaq 100 index futures gained 14 points to 3,863.00.
Analysts said investors are now increasingly convinced that the U.S. central bank's Federal Open Market Committee will not hike rates at its meeting next week, after a raft of recent economic indicators showed signs that the red-hot U.S. economy is cooling. This bodes well for stocks as rate hikes increase borrowing costs for companies and can ultimately affect their bottom line.
The Fed has hiked interest rates six times since June 1999 to keep inflation from cropping up in the economy.
International trade figures for June were due out at 8:30 a.m. EDT (1230 GMT), but analysts saw little influence on the market from that data. A growing trade deficit can be some cause for alarm to the Fed as it can suggest that Americans continue on their spending binge, buying up foreign goods.
Increased imports and rising oil prices are expected to widen the June deficit. Economist polled by Reuters have on average forecast that the U.S. international trade deficit would widen to $31.15 billion from May's record $31.04 billion.
Other data to be issued Friday include the July Federal budget report due at 2 p.m. EDT (1800 GMT).
``I don't think that rocks the world at all,'' Hogan said.
The latest U.S. Consumer Price Index, a key measure of inflation at the retail level, was tame on Wednesday, reinforcing the belief that the Fed will stay put on rates this time. The jobless claims data on Thursday suggested that the rate of expansion of the U.S. economy was slowing, which boded well for sectors like high tech which are seen less affected by a cooling economy.
Thursday marked a higher close for both U.S. blue chips and technology issues, a rare occurrence in recent sessions. The tech-heavy Nasdaq Composite Index (^IXIC - news) closed near the day's highs, at 3,940.87 for a 79.67-point or 2.06 percent gain while the blue-chip Dow Industrial average (^DJI - news) finished the session up 47.25 points, or 0.43 percent, at 11,055.64.
The broader Standard & Poor's 500 index (^SPX - news) was up 16.22 points, or 1.10 percent, at 1,496.07, inching closer yet to its March 24 record close at 1,527.46.
Friday marks a ``double witching'' session, or the simultaneous expiration of options and index futures, which can raise volatility and muddy the picture somewhat, although analysts said they expected no dramatic impact from that.
Among stocks expected to move on Friday, traders cited Agilent Technologies Inc. (NYSE:A - news), spun off from No. 2 computer maker Hewlett-Packard Co. (NYSE:HWP - news) earlier this year, after the company reported higher third-quarter earnings and increased its sales growth forecast for next year.
Agilent, a testing and measurement equipment maker, closed at 46-1/2 but jumped 18 percent in after-hours trade to 55 and in pre-open trade to 54-1/2.
Other stocks to watch included long-distance phone company AT&T Corp. (NYSE:T - news), which firmed to 32-5/8 in pre-open activity from a close of 32-3/16. The Wall Street Journal reported that the heads of AT&T and British Telecommunications Plc (quote from Yahoo! UK & Ireland: BT.L) (NYSE:BTY - news) had explored the possibility of a merger.
Sun Microsystems Inc. (NasdaqNM:SUNW - news) was up at 122 from a close of 119-7/16 after the maker of computer servers and work stations set a two-for-one stock split. |
