U.S. Stocks To Open Higher; Deal Flow, Earnings In View
NEW YORK (MarketWatch) -- U.S. stocks are set to open at higher levels Monday, drawing support from above-forecast results from Schering-Plough Corp. and Merck & Co. and merger news in the financial, oil-drilling and equipment-rental sectors.
The futures contract for the Dow Jones Industrial Average last was up 42 points at 13,980.
Futures contracts for the S&P 500 and the Nasdaq 100 were up 3.9 points at 1,549 and 3.2 points higher at 2,058.5.
On Friday U.S. stocks dropped sharply amid worse-than-forecast results from Google Inc. and Caterpillar and nervousness in the credit market.
On Monday investors will focus chiefly on earnings.
"It's all going to be about earnings this week," said Peter Cardillo, chief market economist at Avalon Partners. "There aren't any important economic numbers until later this week. So we should be focused on earnings."
Earnings of note
Shares of Merck gained 4% to $51 in premarket electronic trade. The pharmaceutical company lifted its annual earnings forecast and its quarterly results exceeded Wall Street's expectations.
Schering-Plough Corp. should be active after the opening. The company's second-quarter earnings more than doubled, due in part to swift sales of such drugs as Remicade and Nasonex. Revenue and earnings per share both beat expectations.
Deal flow news
GlobalSantaFe and Transocean agreed to merge to form a $53 billion drilling firm. Transocean shareholders will receive $33.03 in cash and 0.6996 share of the new company while GlobalSantaFe holders are getting $22.46 in cash and 0.4757 share. The firms are planning a $15 billion recapitalization to dole out the cash to investors.
In preopening trade GlobalSantaFe stock was 8% higher at $80.70 and Transocean shares rose 5.7% to $116.28.
In other merger, news Barclays sweetened its offer for ABN Amro to $93 billion and added a cash portion to it. ABN shares rose 12 cents to $50.96 before the opening.
United Rentals Inc. stock rose 2.7% to $33.25 in premarket trade. The equipment-rental company is being purchased by Cerberus in a deal valued at $6.6 billion.
Hewlett-Packard Co. is buying Opsware Inc. , which makes automation software, for about $1.6 billion. The computer company said the deal will enhance its portfolio of business technology optimization software.
Other stock news
Shares of Wal-Mart Stores Inc. , a component of the Dow Jones Industrial Average, were up 9 cents at $48.15 before the opening. The retail giant said it will slash prices on 16,000 items this week in preparation for the crucial back-to-school shopping season, and plans to roll out an advertising campaign to address how to save money amid still-high gas prices.
Financial stocks will be in focus, after selling off sharply last week on credit-market worries.
Other markets
Treasurys were quiet in the early going, after rallying on Friday on worries about subprime meltdown contagion. The 10-year benchmark note last was down 1/32 at 96-15/32 with a yield of 4.957%.
The dollar traded fractionally higher against some other major currencies early Monday, coming off a record low against the euro and a six-week low against the yen reached during the Asian trading session. "Concern over subprime lending in the U.S. continues to dominate currency markets" as the new week gets underway, said David Jones, chief market analyst at CMC Markets.
The dollar last traded up 0.03% at 121.27 yen, as the euro fell 0.04% to $1.3822 and the pound sterling increased 0.09% to $2.0580.
Crude futures prices softened from 11-month highs as OPEC President Mohamed al-Hamli reportedly said the cartel may increase output as a result of concern that high oil prices might damp global growth.
The September crude contract was 37 cents lower at $75.42 an ounce.
Gold futures were quiet in the early going. ThAugust futures contract last was unchanged at $684.70 an ounce.
By Leslie Wines