Stocks To Open Higher On Merger Developments

NEW YORK (MarketWatch) -- U.S. stocks are set to open higher Friday, as a report that Microsoft Corp. wants to discuss a merger with Yahoo Inc., and other merger news, overshadowed new data showing below-forecast jobs creation in the most recent month.

In the media sector, Reuters Group plc said it received a preliminary takeover approach. The media giant didn't say who had made the approach.

The futures contract for the Dow Jones Industrial Average last was 42 points higher at 13,320.

Futures contracts for the S&P 500 and the Nasdaq 100 were up 5.4 points at 1,513.70 and 9.5 points at 1,916.0.

On Thursday stocks posted gains that were modest but still enabled the Dow Jones industrials to set a record close, following generally upbeat economic reports.

On Friday investors will focus on the merger news and the new non-farm-payrolls report.

The Labor Department said job growth slowed in April to 88,000 and the unemployment rate ticked up to 4.5%. Economists polled by MarketWatch had predicted payroll numbers would slip to 100,000 from the previous reading of 180,000.

In April, average hourly wages increased 2 cents, or 0.2%, to $17.25. Average wages rose 3.7% in the 12 months ended in April, while the average work week fell to 33.8 hours from 33.9 hours.

Charles Campbell, a trading executive at Miller Tabak, called the report "more or less in line." He said that the "whisper number" that circulated through trading rooms before the news was 80,000, which was below the MarketWatch projection.

"The view in the market is that the economy is in fine shape," Campbell said.

Stocks on the move

Yahoo Inc. shares last were 19% higher at $33.50 in electronic trade after the news of the approach from Microsoft Corp. Shares of Microsoft were off 1.4% at $30.55.

Reuters stock shot up 24% to $73.10 after the news it was approached by the unidentified party. Earlier in the week shares of Dow Jones & Co. skyrocketed on news it received a $5 billion takeover offer from News Corp.

Eastman Kodak Co. reported a first-quarter loss of 53 cents a share, or 61 cents on a continuing-operations basis including 26 cents a share in charges. Analysts had forecast a loss of 2 cents a share. It also lowered its forecast of digital earnings from operations by $50 million to a range of $150 million to $250 million.

Starbucks shares were 0.7% higher at $31.83. The company late Thursday reported earnings of 19 cents a share, in line with analyst forecasts, and said it plans to buy back an additional 25 million shares.

Schering-Plough Corp. rose 0.8% to $32.36. The pharmaceutical company was upgraded to overweight from neutral at Prudential Equity Group, which said the firm has shown it is willing to take aggressive steps on the deal front.

Other markets

Treasurys turned higher after the news of weaker-than-expected jobs creation in the latest report. The benchmark 10-year Treasury note last was up 2/32 at 99-21/32 with a yield of 4.681%.

The dollar dropped against its major rivals, then recovered some of its losses after the news of weaker-than-forecast jobs creation. The euro was last up 0.2% at $1.3571, while the dollar was down 0.2% at 120.25 yen.

Gold futures rose Friday, extending its prior-session gains, benefiting from the dollar weakness. Gold for June delivery gained $2.20 to $686.60 an ounce on the New York Mercantile Exchange.

Crude futures were lower after the most recent supply data showed high inventories. The June contract last was 7 cents lower at $63.12.

By Leslie Wines