Major U.S. stock indexes were indicated to open lower Wednesday as index futures fell in premarket trading. Investors were weighing earnings reports from Disney (DIS) and Cisco Systems (ANF), and news that Qatar Airways is seeking compensation from Boeing (ANF) for delays in shipment of 787 aircraft.
Yahoo (YHOO) shares were lower in premarket trading amid indications Microsoft (MSFT) chairman Bill Gates was closing the door on a further offer to acquire the Internet portal.
The dollar was up as U.S. Treasury Secretary Henry Paulson sees economy emerging from credit crunch but warns of bumps along road. Bonds were higher even though Kansas City Federal Reserve Bank President Thomas Hoenig says the Fed must consider rate hikes. Gold was lower. Oil futures were lower before the Energy Dept.’s weekly inventory report.
On Tuesday, the Dow Jones industrial average ended higher by 51.29 points, or 0.4%, to 13,020.83. The broader S&P 500 index moved up 10.77 points, or 0.77%, to 1,418.26. The tech-heavy Nasdaq composite index was up 19.19 points, or 0.78%, to 2,483.31.
On the economic front Tuesday, investors were awaiting reports on nonfarm productivity growth, which econopmists ewxpected to increase to 2.1% in the first quarter from 1.9% in the fourth, and pending home sales, which were seen falling 1% in March following a 1.5% decline in February.
Kansas City Fed president Hoenig said in a speech late Tuesday that the Fed must be ready to raise benchmark interest rates in a timely manner given the "troublesome" inflation outlook. "If inflation gets too high, the economy will suffer dramatically," a Reuters dispatch from Denver quoted Hoenig as saying. Hoenig strongly hinted that he would not support more cuts to the Fed's benchmark interest rates at a time higher inflation could be getting entrenched, given prospects for growth to pick up in the second half of 2008. "The current accommodative stance should be sufficient to cushion the economy from a deeper slowdown and the risks that financial disruptions could spill over to the broader economy," Hoenig said.
According to a Wall Street Journal report, Paulson said U.S. financial markets are emerging from the credit crunch that many economists believe has pushed the country to the brink of recession. "I do believe that the worst is likely to be behind us," Paulson told the newspaper in an interview. The Journal said Paulson's comments appear to be the Bush administration's most optimistic assessment yet about the financial turmoil that began last year with defaults on subprime home loans and spread through financial institutions that owned tens of billions of dollars in mortgage-backed securities. In the interview, however, the Treasury Secretary predicted there would be further "bumps along the road," and that it would take "some months longer" for the market distress to fully dissipate.
Oil prices continues to hover around $122 on continued supply concerns in relation to the earlier rebel attack in Nigeria which had damaged a Shell flow station.
Gold traded back on the defensive after the dollar reasserted itself in European trading. Prices fell from $881.05 highs to record $873.50 lows intra-day, with speculative accounts reducing long positions, according to Action Economics.
Among Wednesday’s stocks in the news, Boeing shares were lower in premarket trading following a Dow Jones report that Qatar Airways, which has 60 Boeing 787 Dreamliners on order, is seeking compensation from the U.S. planemaker as delivery of the aircraft is delayed by 12 months and may order more Airbus A380 aircraft as part of its expansion plans, the airline's chief executive said.