U.S. Stocks Look Set For Opening Gains On M&A Speculation

LONDON (MarketWatch) -- U.S. stocks looked set for opening gains Wednesday, buffeted by merger-and-acquisition speculation that lifted shares of E-Trade and Nymex Holdings in early action.

S&P 500 futures rose 10.8 points at 1,461.10 and Nasdaq 100 futures gained 11.25 points at 1,931.00. Dow industrial futures rose 83 points at 13,200.

"A potential M&A deal between TD Ameritrade and E-Trade is bolstering market spirits this morning," said Marc Pado, a strategist for Cantor.

U.S. stocks were coming off a mixed performance in which investors debated whether, or when, the Federal Reserve would cut interest rates.

But currency action showed that investors were willing to put on more risk Wednesday. The Japanese yen and the U.S. dollar dropped against major rivals, while higher-yielding currencies like the Australian dollar advanced.

"The U.S. dollar, along with the safe-haven yen and Swiss franc, underperformed overnight as a renewed appetite for risk boosted the higher-yielding G10 currencies," said Sophie Hardy, a UBS analyst.

The benchmark 10-year Treasury bill was down 7/32 at 101, with a yield of 4.62%. Gold futures rose $2 to $668.20 an ounce.

Problems in the housing market were still apparent. One home builder, Toll Brothers , Wednesday reported a 85% profit decline; another, WCI Communities , lost $33.2 million during the most recent quarter.

Accredited Home Lenders Holding Co. , the San Diego mortgage-loan provider, said it would stop accepting new loan applications and would restructure, reducing the workforce by 62% to 1,000 from 2,600.

But there also was deal speculation to examine.

TD Ameritrade and E-Trade are discussing a merger, which would create a dominant player in the online-brokerage industry and possibly prompt another industry shakeout, The Wall Street Journal reported, citing people familiar with the matter. E-Trade rose 10% and TD Ameritrade climbed 8% in pre-open trade.

Dubai World, the holding company for the Persian Gulf state, agreed a $5 billion investment deal with MGM Mirage that lifted MGM shares by 12% in early action.

NYMEX Holdings rose 7% after it issued a statement saying it's held talks with suitors and said it would cut up to 150 jobs and sell its headquarters.

Also of note, Tech Data climbed 9% in the pre-open after it posted a profit on 14% sales growth.

In the commodities sector, shares of top miner BHP Billiton advanced in London trading. Annual profit rose 28% and it said customers have indicated they don't expect volatility in the U.S and European credit markets to have a material impact on demand for raw materials.

Oil futures reclaimed the $70 a barrel mark ahead of weekly inventories data due out at 10:30 a.m. Eastern.

By MarketWatch