Thursday November 29, 8:16 am Eastern Time
Stocks Set to Open Up, but Eyes on Enron
By Haitham Haddadin
NEW YORK (Reuters) - Stocks are set to open slightly higher on Thursday amid some upbeat corporate outlooks, but economic data and the aftermath of the near-collapse of energy trading giant Enron Corp. could affect sentiment.
The market was seen taking a breather after stocks sank on Wednesday as Enron (NYSE:ENE - news) teetered on the brink of one of the biggest corporate implosions in U.S. history.
Enron, which plunged more than 85 percent in frenzied trading, dragged on the market as investors also sold amid worry that a rally from Sept. 21 lows reached in the aftermath of the attacks on the United States was overdone.
But early Thursday equity index futures suggested stocks were headed for a mildly higher open.
``It's looking slightly higher. We had a couple of stocks oversold because of the Enron situation, so you may get a little bit of a snap-back early on but I don't know if this is going to hold,'' said Robert Basel, head of listed trading at Salomon Smith Barney. ``It's only 8 o'clock here and we got a lot of things to still look at this morning.''
Investors await what is anticipated to be a mixed bag of economic news showing higher U.S. jobless claims and a rise in durable goods orders.
Hand-held computer maker Palm Inc. (NasdaqNM:PALM - news) rose in extended-hours trading on Wednesday after the company said it expects to meet estimates. Palm rose to $3.64 in extended-hours trading from its Nasdaq close of $3.41. Palm was up at $3.72 in pre-open trade Thursday.
Storage networking company Brocade Communications Systems Inc. (NasdaqNM:BRCD - news) rose to $29.25 in extended-hours trading from a close at $28.82. The company reported quarterly operating profits fell sharply as the slower economy kept many corporate buyers on the sidelines, although the results beat Wall Street forecasts.
Among the latest economic data Wall Street gets ahead of the open, durable goods orders are expected to a show a rise of 2.1 percent after a decline of 8.50 percent in the prior period.
Also awaited at the same time, 8.30 a.m. EST, are data on the number of Americans filing for weekly first time jobless claims. The data, covering the week ended Nov. 24, is expected to a show claims rose to 448,000 from the previous week's 427,000.
Investors will get October new home sales numbers shortly after the open, and they are expected to show a drop to 853,000 from 864,000.
December futures for the S&P 500 index rose 2.70 points to 1,132 while futures for the Nasdaq 100 added 6 points to 1,565. Futures for the Dow Jones industrials gained 27 points at 9,740.
The indicative Dow Jones industrial average (.DJII), which is based on prices of Dow stocks trading in Germany's Deutsche Boerse U.S. market segment, rose 30.92 points, or 0.32 percent, to 9,742.78.
Enron sank on Wednesday after rival Dynegy Inc. (NYSE:DYN - news) pulled out of its planned $9 billion takeover of the beleaguered energy trader. Credit rating agencies slashed Enron's bonds to junk status and shoved the once mighty company another step closer to bankruptcy.
Enron squeezed other energy traders and financial giants Citigroup Inc. (NYSE:C - news) and JP Morgan Chase & Co. Inc. (NYSE:JPM - news), which may suffer losses of more than $400 million combined on their lending to the energy trading group, according to at least one analyst. Enron, which finished at 61 cents on Wednesday, was a little higher in European trading.
On Wednesday, the blue-chip Dow Jones industrial average (.DJI) surrendered 160.74 points, or 1.63 percent, to 9,711.86, the largest drop in about a month and the lowest close since Nov. 12. The broader Standard & Poor's 500 Index (.SPX) slid 20.98 points, or 1.83 percent, to 1,128.52. The technology-laced Nasdaq Composite Index (.IXIC) dropped 48 points, or 2.48 percent, to 1,887.97.
In extended trading, software provider FreeMarkets Inc. (NasdaqNM:FMKT - news) rose after raising its quarterly revenue and profit outlook after several large customers renewed long-term contracts. Shares rose to $16 from a close of $13.59 on the Nasdaq.
H&R Block, the No. 1 U.S. tax preparer, rose to $37.25 on the Instinet trading system after closing at $36 on the New York Stock Exchange. The company raised its profit forecasts for the current fiscal year as its second-quarter loss narrowed, helped by new accounting rules and strong mortgage business performance.
Outside the United States, European shares traded modestly higher by late morning on Thursday as investors shrugged off the likely impact of U.S. energy firm Enron's financial woes on European banks.
At 1125 GMT, the Eurotop 300 index (.FTEU3) of pan-European blue chips was up 0.15 percent at 1,226 points after suffering four straight sessions of declines.
The world's largest reinsurer Munich Re provided some cheer with positive comments on its core markets next year, sending its shares up 3.8 percent.
Tokyo stocks ended mixed on Thursday after solid gains in defensives such as Yamanouchi Pharmaceutical Co. Ltd. underpinned sentiment hit by the near collapse of Enron.
The benchmark Nikkei share average (.N225) finished up 31.15 points or 0.29 percent at 10,655.96, snapping a two-day losing streak, after finding technical support at its 25-day moving average at around 10,500.
