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Stocks Seen Opening Lower After Outage
Thursday August 14, 5:58 pm ET
By Rachel Cohen
NEW YORK (Reuters) - Futures pointed to a lower Friday opening for U.S. stocks as widespread power outages shortly after the close of Thursday's regular session left investors uncertain that trading would resume normally in the next session.
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In regular trade on Thursday, stocks closed higher, as investors cheered better-than-expected government data on employment and trade that pointed to an improving U.S. economy.
A massive power outage swept across swaths of the eastern United States and Canada late Thursday afternoon, leaving sections of New York, Detroit, Cleveland and Toronto without electricity, witnesses said.
Wall Street firms were waiting to see whether the loss of power would affect trading or the overnight settling of transactions. Fears of civil unrest -- if power is not restored quickly -- also could be hurting futures, traders said.
"I don't think people are fearing terrorism. I think they are fearing massive looting in cities like New York and Detroit if the power doesn't come back up before it gets dark out," said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access. "Obviously, that creates economic problems. I think that's the reason why you're probably seeing the futures market move lower after hours."
September futures for the Standard & Poor's 500 index fell 6.70 points to 981.00. September futures for the Nasdaq 100 dipped 9.00 points to 1,236.50. Reuters' latest data did not show any trades in Dow Jones futures after 4:19 p.m. EDT).
During regular trading on Thursday, government data showed signs of job market stability and a sharp narrowing in the U.S. trade gap after the biggest export surge in three years.
The data pointed to the economic rebound investors had been betting on since early spring. Wall Street's reaction was muted early in the day, but stocks cut early losses and crawled higher as the session progressed.
The market also got a boost after a report that an Indonesian man known as "Hambali," suspected mastermind of the Bali bombings and the more recent JW Marriott hotel blast in Jakarta, has been captured.
People feel "the threat of further terrorist attacks is somewhat reduced," said Tim Heekin, director of trading at investment bank Thomas Weisel Partners. "It's a victory for the U.S., so it is a little bit of a relief pop."
Hambali was the most wanted man in Southeast Asia and was seen as the bridge between the militant group Jemaah Islamiah and Osama bin Laden's al Qaeda, blamed for the Sept. 11 attacks in 2001.
In the regular session, the blue-chip Dow Jones industrial average (CBOT:^DJI - News) added 38.80 points, or 0.42 percent, to finish at 9,310.56. The broader Standard & Poor's 500 Index (CBOE:^SPX - News) rose 6.48 points, or 0.66 percent, to 990.51. The technology-laced Nasdaq Composite Index (NasdaqSC:^IXIC - News) gained 13.73 points, or 0.81 percent, to finish at 1,700.34, based on the latest available data.
Rising bond yields kept a lid on stock price gains. U.S. Treasury prices fell for a fourth straight session, sending the yield on the benchmark 10-year note to a 1-year high near 4.67 percent. Some investors fear that rising bond yields could choke economic growth by raising borrowing costs.
But after the power outage, Treasury prices jumped. The 10-year note's price surged 25/32, while its yield fell to 4.46 percent.
The number of Americans filing first-time claims for jobless benefits edged up slightly last week, the government said on Thursday. But the number held below 400,000 for the fourth consecutive week, which economists say indicates some job creation.
Initial claims for state unemployment benefits rose a slim 2,000 to 398,000 in the week ending Aug. 9, the Labor Department said.
A separate report showed the U.S. trade gap at a smaller-than-expected $39.5 billion in June, down from $41.5 billion in May on the biggest surge in exports in three years.
A third government report showed the overall U.S. Producer Price Index, a gauge of inflation at the wholesale price level, crept up 0.1 percent in July, helping keep deflation fears at bay without sparking inflation concerns.
Intel, the world's largest maker of computer chips, rose 43 cents, or 1.7 percent, to $25.14 and ranked as the Nasdaq's most active share. Web gear giant Cisco Systems Inc. (NasdaqNM:CSCO - News) added 21 cents to $17.80.
International Paper (NYSE:IP - News) climbed $1.11 to $40.80, and aluminum producer Alcoa Inc. (NYSE:AA - News) rose 78 cents to $27.80. Both led the Dow higher.
But McDonald's Corp. (NYSE:MCD - News) dragged on the blue-chip gauge with a loss of 22 cents to $22.95. Wachovia Securities cut the fast-food company to "market perform" from "outperform," saying the shares are "near fully valued."
Diversified manufacturer 3M Co. (NYSE:MMM - News) added more pressure to the Dow, skidding $2.36 or 1.63 percent to $142.14. Smith Barney cut its rating on 3M to "in-line" from "outperform" to "reflect its recent strong upward move." |
