U.S. Stocks To Open Higher Amid Deal-making

NEW YORK (MarketWatch) -- U.S. stocks are expected to open higher on Monday, as investors attempt to continue last week's rally amid deal-making news, including a report that BHP Billiton is planning a bid for Alcoa Inc.

Futures for the Dow Jones Industrial Average were up 37 points at 13,790, while those for the S&P 500 rose 3.5 points to 1,551.

Nasdaq 100 futures gained 1 point to 1,970.

Among blue chips, Alcoa rose 2.8% before the open after a report in The Times (of London) newspaper said BHP Billiton Ltd. is reviewing plans to buy the aluminum producer.

Wal-Mart Stores Inc. rose 0.3%. The giant retailer has asked a state court in Michigan to dismiss the lawsuit filed by fired advertising executive Julie Roehm, contending that she lives in Arkansas.

Boeing was in focus as the Paris Air Show began. Airbus won orders from Middle Eastern airlines Qatar Airways and Emirates as well as US Airways , while Boeing inked two smaller deals.

Among technology shares, Google Inc. will be in focus. Ebay Inc. said it expects to keep adds off Google's search engine for about a week, as it tests how effectively the ads drive visitors to its auction site and produce sales.

Yields on back burner?

Stocks rallied last week, as investors cheered economic data pointing to tame inflation, which helped to contain a surge in bond yields. Higher bond yields provide an attractive alternative to riskier bets in the stock market, while also lifting borrowing costs for businesses and consumers.

On Monday, yields were falling, as bond prices rose, ahead of data which might point to further weakness in housing. The benchmark 10-year Treasury bond up 6/32 at 95 3/32, while its yield fell to 5.138%.

Deal-making

After being eclipsed by rising bond yields in recent weeks, deal-making returned as a catalyst for the market.

Yields and deals, meanwhile, are not unrelated.

"The enthusiasm for lower rates has less to do with the odds of a rate cut, and much more to do with 'borrowing costs'," said Marc Pado, chief market strategist at Cantor Fitzgerald, in a note. "This bull market has been fueled by M & A activity. The fear is that higher rates might choke off borrowing and stem the tide of stock being taken private."

In other deal-making news Monday, shares of Dow Jones & Co. , publisher of this report, gained 1.7%. General Electric Co. and the publisher of the Financial Times, Pearson PLC, are in talks about making a joint bid for the publishing company, according to the Wall Street Journal.

Such a bid would rival the $60-a-share, or $5 billion proposal for Dow Jones made by News Corp. .

Elsewhere, Nymex Holdings fell 1.6% after the Chicago Mercantile Holdings said it's not in talks to buy the New York commodities exchange.

By Nick Godt