U.S. stocks seen flat to little up; investors await key data
By Haitham Haddadin
NEW YORK, May 11 (Reuters) - Wall Street looked for a flat
to slightly higher open on Friday as the market sought a cue
from key economic data on wholesale level inflation and retail
sales that could shed more light on the Federal Reserve's moves
on interest rates.
Ahead of the release of the data, Nasdaq 100 futures for
June were trading 4.50 points higher at 1,847, suggesting a
mild rise at the open in the tech-laden index's biggest stocks.
Dow Jones industrials futures were off 1 point at 10,944
and Standard & Poor's 500 futures gained 0.70 of a point at
1,262.10, flagging a largely flat open for the blue chips and
broad market.
The U.S. government is set to release its key whole level
inflation measure, the Producer Price Index (PPI) at 8.30 a.m.
(1230 GMT). The April PPI is expected to show a rise of 0.4
percent compared with a decline of 0.1 percent in the prior
month. Excluding volatile food and energy prices, the core
figure is seen up 0.1 percent, flat compared with the prior
reading.
While such a rise, if confirmed, is seen as somewhat
marginal, the PPI figures are important for Wall Street because
a sharp spike in inflation could derail the Fed's campaign to
lower interest rates in order to boost the world's largest
economy.
Retail sales data for last month are due to be issued
simultaneously, and are seen edging up 0.2 percent in April vs.
a drop of 0.2 percent in March. Excluding auto sales, the
number is expected to show a rise of 0.4 percent compared with
a decline of 0.1 percent.
Traders expect the central bank will slash interest rates
when it meets on Tuesday for a fifth time this year by half a
percentage point to spark an economic turnaround.
"The inflation figures have been benign, the PPIs will show
a little bit of an uptick because of the energy situation
(higher prices), but the core rate is up 0.1, so that's
benign," said Larry Wachtel, analyst at Prudential Securities.
"As for the sales figures, we got the chain store sales
yesterday, and today we get the overall retail picture, sales
will be slightly up because of higher gasoline prices at the
pump. But that's also benign."
If the numbers come in as expected they will not prompt any
change in Fed thinking, he noted.
Blue-chip stocks scraped out gains on Thursday, thanks to
strong sales in April by retailers such as Wal-Mart Stores Inc.
<WMT.N>, but technology stocks slid as investors cashed in
profits from last month's big rally and geared up for next
week's meeting of the Federal Reserve.
Wall Street got an early boost on Thursday from a surprise
interest-rate cut by the European Central Bank (ECB) and a
report that the number of Americans lining up for first-time
unemployment benefits last week fell sharply. But investors
headed back to the sidelines later in the day ahead of Friday's
data.
In overseas markets, Japanese stocks ended little changed
on Friday as optimism over a surprise rate cut by the ECB was
muted by concerns over Japan's corporate earnings and
government policy steps. The benchmark Nikkei average <.N225>
ended up 26.13 points or 0.19 percent at 14,043.92.
European markets made little headway by midsession on
Friday, consolidating the previous session's rate cut-fuelled
gains as the key U.S. data loomed on the horizon. The
pan-European FTSE Eurotop <.FTEU3> was off 0.2 percent while
the narrower blue-chip DJ Stoxx 50 <.STOXX50E> slipped 0.4
percent.
Shares of International Business Machines Corp. <IBM.N>
edged higher in U.S. after-hours trading on Thursday after the
world's largest computer maker stood by its forecast of high
single-digit sales growth and double-digit earnings growth but
shares eased back to $113.60 in pre-opening trade on Friday.
Shares of drug-maker Schering-Plough Corp. <SGP.N> were
higher in pre-open trading Friday in New York after a published
report revived talk that Merck and Co. Inc. <MRK.N> was looking
to acquire the firm. Schering-Plough shares rose to $40 on the
Instinet electronic broker system, up from a Thursday close at
$37.10. The stock hit $43 before easing. Merck was not active.
"As a matter of policy, we would not comment on a rumor,"
said Gregory Reaves, a spokesman for Merck, when asked about
the report in Business Week magazine. Schering-Plough officials
were not immediately available for comment.
Nortel Networks Corp. <NT.N> <NT.TO>, the world's largest
supplier of telecommunications equipment, told Reuters on
Thursday that it will exit the Digital Subscriber Line (DSL)
business to focus on higher-growth markets. Nortel shares rose
to $15.35 after-hours from a close at $15.22.
Pixar Animation Studios <PIXR.O>, a maker of computer
animated movies, late on Thursday reported a quarterly net
profit of $8.3 million, beating forecasts, and raised its
profit target for 2001. Pixar rose to $36.20 vs. $34.09.
Wireless telephone service provider Western Wireless Corp.
<WWCA.O> late on Thursday posted a quarterly loss that widely
missed expectations. It fell to $41.82 vs. a close at $43.50.
On Thursday, the blue-chip Dow Jones industrial average
<.DJI> rose 43.46 points, or 0.40 percent, to end at 10,910.44,
the benchmark Standard & Poor's 500 index <.SPX> edged down
0.03 percent, or 0.36 of a point, to 1,255.18 and the Nasdaq
Composite index <.IXIC> slid 27.83 points, or 1.29 percent, to
2,128.82.
((--Wall Street Desk, 212-859-1709))
REUTERS
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