US STOCKS-Futures edge up on deal news; GDP ahead
Thu May 31, 2007 7:11 AM ET
By Caroline Valetkevitch
NEW YORK, May 31 (Reuters) - U.S. stock index futures edged higher on Thursday after Wachovia Corp. <WB.N> said it planned to buy brokerage A.G. Edwards Inc. <AGE.N>, but investors were cautious before key data on economic growth and inflation.
A revised government estimate of change in first-quarter U.S. gross domestic product is due at 8:30 a.m. (1230 GMT). After the initial 1.3 percent estimated rise, economists on average expect the annual growth rate to be even lower at 0.8 percent.
U.S. bank Wachovia and A.G. Edwards said they would merge to create a retail brokerage firm with $1.1 trillion in assets. The deal calls for the exchange of 0.9844 shares of Wachovia common stock and $35.80 in cash for each A.G. Edwards share.
"It's a fast-moving train, fueled by deals, among other things," said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey. "Every time a deal takes place, more stock comes out of the market, and it's not being replaced. So there's more cash that has to be redeployed."
S&P 500 futures were up 0.70 point, just above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures gained 18 points, and Nasdaq 100 futures were up 1.75 points.
On Wednesday, the Standard & Poor's 500 closed at a record high, surpassing the previous record set seven years ago. The market's advance came after minutes from the Federal Reserve's latest meeting reassured investors about the economy's health. The index's gains have also come as a result of corporate takeovers and share buybacks.
The Standard & Poor's 500 Index jumped 0.80 percent to close at 1,530.23. The Dow Jones industrial average shot up 0.83 percent to a record close of 13,633.08, just off a lifetime intraday high of 13,636.09 set earlier in the session. The Nasdaq Composite Index ended up 0.80 percent, at 2,592.59.
The GDP data includes the core personal consumption expenditures prices index, or core PCE, an inflation measure monitored by the Fed. The revised data is not expected to show any change from the initially reported 2.2 percent increase year-over-year.
A report on Midwest business conditions from the National Association of Purchasing Management-Chicago is also expected on Thursday at 9:45 a.m. (1345 GMT). The consensus is that the Chicago PMI index rose to 54.0 in May from 52.9 in April.
Shares of Yahoo Inc. <YHOO.O> dropped 1 percent after the bell on Wednesday as the Internet media company announced that its chief technology officer had resigned.
