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Market Looking Flat Ahead of Holiday

CNBC.com
Friday, 28 May 2010 | 8:43 AM ET

Stock futures indicated a flat open on Wall Street, with investors unmoved by a report that contrasted a gain in personal income against no improvement in spending.

The government said incomes rose 0.4 percent in April—equal to the growth in March—but consumers remained wary and did not increase their spending, choosing instead to boost the savings rate to 3.6 percent from 3.1 percent.

The market indicated a flat opening ahead of what likely will be a light-volume pre-holiday session.

Stocks rallied Thursday after a brutal session on Wednesday. Investor concerns eased after China denied claims that it was reviewing its euro zone bond holdings due to the region's debt crisis. U.S. markets are closed on Monday for the Memorial Day holiday.

Barring a massive rally, the market is on pace for its worst May since 1962.

Asian stocks surged on Friday, with the Nikkei 225 moving up from a six-month low below 9,400 hit during trade the previous day, before ending up 1.2 percent. European stocks pushed higher, adding to a two-day rally.

In corporate news, Prudential is trying to renegotiate the $35.5 billion price tag on the Asian businesses of AIG in a last-ditch attempt to win over some of its biggest investors and head off a “no” vote on its planned takeover of AIA.

And Goldman Sachs is seeking to settle with the Securities and Exchange Commission to avoid a fraud charge which could result from the lawsuit filed by the agency last month, according to the Wall Street Journal. Goldman shares edged higher in premarket trading.

Meanwhile, Royal Dutch Shell said it would pay $4.7 billion in cash to buy privately-held East Resources, giving it substantially more exposure to crucial shale gas plays in North America.

Also in energy, BP was set to reverse some of the previous day's gains on news that CEO Tony Hayward emailed staff that the "top kill" strategy the company is employing to contain the Gulf of Mexico oil spill has an uncertain chance of success. Shares fell 3 percent premarket.

In other economic news, this month's Chicago PMI will be released, at 9:45 am ET, with economists forecasting 60, down from April’s 63.8.

And the Michigan Consumer Sentiment Index is due at the same time, with May’s figures predicted to be 73.2, down from 73.3 the prior month. Consumer confidence rose in May to 63.3, well up from April’s 57.7. The relationship between the Consumer Confidence and Michigan Sentiment are tightly correlated, with the Michigan Index tending to be the first of the two readings to reverse course.

No major corporate earnings results are expected on Friday’s calendar.

Oil prices edged higher, with crude earlier climbing over $75 a barrel before pulling back. Gold edged lower and was last trading around $1,210 an ounce. The dollar edged lower against a basket of foreign currencies while the euro nudged higher against the greenback. Treasurys also rose, with the benchmark 10-year note last yielding 3.34 percent, compared to 3.36 percent late Thursday.

Elsewhere, Toys "R" Us is planning an $800 million initial public offering in the latest big private equity deal. The company will trade under the ticker "TOYS."

Internet-monitoring equipment maker Blue Coat Systems shares were liklely to plunge after it posted weak fourth-quarter earnings Thursday.

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