Wed, May 26, 2010
Business > Markets

US stocks to open higher as bargain hunters prowl

2010-05-26 13:19:42 GMT2010-05-26 21:19:42 (Beijing Time)

Stock index futures pointed to a higher open on Wednesday, a day after markets clawed back from a steep sell-off and as U.S. Treasury Secretary Timothy Geithner flew to Europe to press for united action to tackle the region's deepening debt crisis.

Banks and industrial stocks, among the worst-hit issues in the pullback, rose in early trading, with Citigroup Inc (C.N) climbing 4.5 percent and industrial conglomerate General Electric Co (GE.N) up 2.1 percent. Citi was upgraded to "outperform" by Oppenheimer, which said the stock was a good value.

"We're going to see some bargain hunters in the material names that have been particularly beaten down in this latest leg down in the market, and you'll also see some bargain hunting in large-cap technology and in the financials," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

Kenny said it was too early to tell if Tuesday's late turnaround and Wednesday's early gains signaled the market has found a bottom after the sharp declines.

S&P 500 futures rose 8.3 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 62 points, and Nasdaq 100 futures added 11.5 points.

Technology issues were among early strong gainers, with Apple Inc (APPL.O) up 2.1 percent, and Dell Inc (DELL.O) adding 1.1 percent.

Geithner urged Europeans to work with Washington on a consistent approach to financial reform as the European Commission unveiled plans for a crisis levy on banks. Theeuro-zone debt crisis has shaken world markets and fueled fears about a double-dip recession.

Commodity prices also bounced back after steep declines. Oil futures rose 2 percent to top $70 a barrel after a report showed a drop in U.S. gasoline stockpiles.

That helped energy companies like Anadarko Petroleum Corp (APC.N), which rose 1.4 percent, and Schlumberger Ltd (SLB.N), which gained nearly 2 percent.

U.S. indexes have entered a technical correction, falling more that 10 percent from a recent peak on April 23. But Tuesday's late rally pushed the Dow industrials back above the psychologically important 10,000 level.

European stocks rose 2.4 percent Wednesday morning, bouncing back from nine-month lows in the previous session, while Japan's Nikkei average closed up 0.7 percent after tumbling to a six-month low.

New orders for long-lasting U.S. manufactured goods increased more than expected in April, boosted by bookings for aircraft, but fell for the first time in three months, excluding transportation.


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