Futures Aim Higher on Citigroup Deal
Stock index futures pointed to a higher open for Wall Street, with Citigroup leading the way as the largest US bank said it is close to a deal to sell $12 billion in leveraged loans and bonds.
Earnings worries and fears of more losses linked to the subprime mortgages crisis continue to haunt the markets, but the Citi announcement provided at least some assurance that companies are taking proactive measures to shore up their balance sheets. The deal also involves private equity firms Apollo Group, Blackstone Group and TPG.
Citi shares were up 2.6 percent in premarket trading.
Shipping company United Parcel Service contributed to the market gloom, lowering its outlook because of lower volume and higher fuel costs.
In the tech sector, the battle between Microsoft and Yahoo looks set to take a new turn as Legg Mason -- a major shareholder in the portal company -- is ready to back Yahoo's effort to stay independent if Microsoft lowers its buyout offer, according to the Wall Street Journal, which quotes an interview with portfolio manager Bill Miller.
And Dow component Boeing could be active after London newspaper The Times reported the company is set to announce an 18-month delay to its 787 Dreamliner.
"The Citigroup news will help stem any declines because it's signaling that the financials are working out their problems and able to sell off weaker loans," Peter Dunay, chief investment strategist at Meridian Equity Partners in New York, told Reuters. "But there's very little impetus for the upside here, particularly with UPS guiding lower and Boeing delaying one of their airline shipments."
Investors will also listen carefully to a speech on financial literacy by Federal Reserve chairman Ben Bernanke at 9:30 am New York time, looking for more clues on what the Fed's next moves will be.
The Fed is looking at contingency plans to bolster its lending power if recent measures it has taken to unfreeze the credit markets fail, the Wall Street Journal reported.