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Futures up with crude prices lower

Futures up with crude prices lower
Cendant to split up into four; SBC upgraded
By Steve Goldstein, MarketWatch
Last Update: 6:46 AM ET Oct. 24, 2005

LONDON (MarketWatch) - U.S. stock market futures notched higher Monday, amid weakness in crude-oil prices as Hurricane Wilma nears Florida and a break-apart plan at conglomerate Cendant. The drug sector also will be a focus with earnings from Merck & Co. and Schering-Plough to come.

S&P 500 futures rose 3 points at 1,186, and Nasdaq 100 futures were up 3 points at 1,578.5.

On Friday, the Dow industrials fell 66 points at 10,215, while the S&P 500 rose 1.8 points to 1,179 and the Nasdaq Composite rose 14 points at 2,082, with investors juggling a disappointment from Dow component Caterpillar (CAT: 48.92, -5.11, -9.5%) with better-than-expected results at Internet search engine Google Inc. (GOOG: 339.90, +36.70, +12.1%).

On Monday, front-month crude fell back below $60 a barrel as Wilma neared Florida and on concerns over flagging demand. See story.

Though the economic calendar is barren Monday, consumer confidence and existing home sales data will be released Tuesday, with the eagerly-awaited third-quarter GDP release due for Friday. Economists polled by MarketWatch expect 3.6% growth, compared to 3.3% in the second quarter.

The dollar was a touch higher on the euro, at $1.1936, but slightly lower vs. the Japanese yen, at 115.72 yen. Also overseas, the Nikkei 225 ended 0.7% lower, while most European markets advanced.

Of companies in focus, Cendant Corp. (CD: 20.09, +0.45, +2.3%) said early Monday it will split itself into four companies by 2006, and the name of the controversial diversified company will disappear. The real estate company, which will include brokers Century 21 and Coldwell Banker, will be the biggest unit of the four. See story.

Spain's Banco Santander Central Hispano SA (STD: 12.81, +0.05, +0.4%) is in advanced negotiations to take a stake in Philadelphia's Sovereign Bancorp Inc. (SOV: 23.37, +0.25, +1.1%) , which will use the proceeds to buy Independence Community Bank Corp. (ICBC: 32.45, -0.20, -0.6%) , The Wall Street Journal reported.

The same newspaper reported that private-equity firms are actively looking at a buyout of Computer Sciences Corp. (CSC: 45.35, +0.63, +1.4%) .

Earnings are expecting from Merck (MRK: 26.18, -0.74, -2.7%) and Schering Plough (SGP: 21.11, -0.19, -0.9%) .

Schering AG (SHR: 59.86, -0.16, -0.3%) , not affiliated with the U.S. drugmaker, posted better-than-expected earnings and revenue and lifted profit guidance on cost-cutting and the performance of its multiple sclerosis and birth control drugs. See story.

Pilgrim's Pride Corp. (PPC: 34.09, -0.59, -1.7%) added that it has raised its fourth quarter earnings guidance to a range of between $1.07 to $1.12 a share, from a previous range of 90 cents to $1.00 a share. The company said it was able to raise the guidance due to better results in both its U.S. and Mexico chicken operations.

Broker calls

Prudential Equity Group upgraded telecoms operator SBC Communications (SBC: 23.00, +0.46, +2.0%) to neutral weight from underweight, citing valuation, washed out sentiment and the company's recent ability to improve margins and deliver solid fundamentals despite persistent line losses.

Merrill Lynch cut State Street Corp. (STT: 54.43, +0.49, +0.9%) to neutral from buy, saying the shares are within 1% of its $55 price target. The broker told clients that the downgrade was purely a valuation call and that momentum remains good.

Merrill Lynch cut fashion accessory retailer Coach, Inc. (COH: 32.26, +0.55, +1.7%) to neutral from buy, citing its belief that this holiday season may be more subdued. The broker told clients that the stores today have a lot less color than a year ago when pink was dominant.

Steve Goldstein is MarketWatch's London bureau chief.


LINK: http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&gui...