U.S. Stocks Set To Open Flat; Blackstone-Hilton Deal In View

NEW YORK (MarketWatch) -- U.S. stocks are set for a flat opening Thursday as investors return from the Independence Day holiday, although the market should get some benefit from fresh mergers-and-acquisitions developments -- most notably, Blackstone Group's $26 billion deal to buy Hilton Hotels Corp.

The futures contract for the Dow Jones Industrial Average last was down 20 points at 13,645.

Futures contracts for the S&P 500 and the Nasdaq 100 were unchanged at 1,536.20 and up 1.2 points at 1,986.2.

On Tuesday stocks closed higher after a shortened session before the one-day holiday.

On Thursday investors will focus on merger news and an increasingly disadvantageous interest rate differential for the dollar. The Bank of England Thursday lifted its key rate to 5.75%, contrasting with the U.S. fed funds rate of just 5.25%.

"I would say it is going to be a quiet day after the holiday and after a good run on Monday and Tuesday," said Peter Boockvar, equity strategist at Miller Tabak.

"But interest rates are going higher and that may be one fly in the ointment,' he said.

The European Central Bank left rates unchanged, but is widely expected to put in place more rate hikes later this year.

Two new reports suggested a healthy labor market. The ADP employment report, a measure of jobs creation in the private sector, said 150,000 new non-government jobs were created in June, marking the fastest growth rate in seven month.

The report would suggest hints that the nation's nonfarm payrolls, including government and private jobs, rose about 175,000 in June after adding in government jobs. The jobs report is due at 8.30 a.m. Eastern on Friday.

The MarketWatch forecast, based on a poll of economists, is that the economy created 130,000 new jobs last month, which would be down from 157,000 in May.

Separately, the Labor Department reported that initial claims rose by 2,000 in the latest week to 318,000, a level that is consistent with health jobs growth.

The Institute for Supply Management's survey of the services sector for last month will be released at 10 a.m. Eastern. The MarketWatch projection is for a headline reading of 58.2%, which would be down from $59.7% in May.

Other stocks

Hilton Hotels Corp. shares shot up 29% to $46.25 in premarket electronic trade. Late Tuesday after the close of trade Blackstone Group said it will buy the hotel chain for $47.50 a share, which represents a 40% premium over Monday's closing price and or 32% over Tuesday's close.

The deal has generated speculation about what other hotel chains are takeover targets. On Wednesday in London trade, InterContinental Hotels and Accor jumped higher.

The Wall Street Journal online is reporting that there is speculation that Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc. are possible takeover candidates.

Chemicals group Huntsman Corp. said Wednesday it received a private-equity firm made a cash buyout offer of about $6 billion that trumps last week's bid from Dutch group Basell.

A Coca-Cola Co. spokesman said Wednesday the company is looking into buying Cadbury Schweppes PLC's Snapple iced tea brand or building its own tea brand.

Bank of New York Mellon agreed to buy out ABN Amro's 50% stake in its global custody joint venture for an undisclosed price.

Other markets

The British pound was up 0.1% at $2.0187, near a 26-year high set less than a day ago at $2.02. The pound rally follows the Bank of England's quarter-point rate hike.

In other currencies, the dollar was down 0.2% to the yen at 122.48, while the euro was up 0.2% at $1.3642. The ECB has laid the groundwork for two more rate hikes by the end of the year, according to the consensus on Wall Street.

Treasurys were sent lower after the strong labor reports, which suggest that the economy may be stong enough for the Federal Reserve to leave rates unchanged. The benchmark 10-year Treasury note last was off 15/32 at 95-11/32 with a yield of 5.105%.

The August crude contract last was up 29 cents at $71.70, as the commodities market anticipates the midmorning release of both crude and gasoline stockpile figures for last week.

Gold was rising too, with the August contract last up $2 at $657.40 an ounce.

By Leslie Wines