Market to Open Lower on Weak Oil

Elena
10 Jan, 2007
New York City

U.S. stock futures pointed to a lower market opening Wednesday due to a drop in Latin American shares and steep declines in oil prices. According to a Commerce Department report, the U.S. trade deficit fell unexpectedly by 1.0% in November to $58.2 billion, marking the third straight decline in the deficit and its lowest level since July 2005. Alcoa rose 4.5% in pre-open after reporting stronger-than-expected Q4 results.

[R]9:00AM Market futures traded lower due to weak oil prices.[/R]
U.S. stock futures pointed to a lower market opening Wednesday due to a drop in Latin American shares and steep declines in oil prices. Energy shares such as Exxon Mobil Corp. ((XOM)) and Chevron Corp. ((CVX)) are expected to come under pressure as crude fell to $55.07 a barrel. Concerns about oil prices largely overshadowed positive economic data. According to a Commerce Department report, the U.S. trade deficit fell unexpectedly by 1.0% in November to $58.2 billion, marking the third straight decline in the deficit and its lowest level since July 2005. Shares of Apple ((AAPL)) hit an all-time high on Wednesday before the bell, rising 1.7% after several brokerages raised their price targets. The advance came a day after the company unveiled its long-awaited iPhone.

Dow component Alcoa ((AA)) rose 4.5% in pre-open after reporting stronger-than-expected Q4 results. The world's largest aluminum producer reported Q4 revenues increase 20% from a year ago to $7.8 billion, exceeding estimates for $7.6 billion. The revenue benefited from stronger demand for products sold in aerospace, commercial transportation and commercial building markets. Net income for the quarter rose 60% to $359 million, including after-tax charges of $386 million for restructuring and impairment. In deal news, US Airways Group Inc. ((LCC)) said it increased its takeover offer for bankrupt rival Delta Air Lines Inc. to $10.2 billion in cash and stock. S&P 500 futures were down 4.9 points, far below fair value. Dow Jones industrial average futures fell 43 points, and Nasdaq 100 futures slipped 10 points.


[R]8:00AM US Airways increased bid for Delta by 20%.[/R]
US Airways Group Inc. ((LCC)) increased Wednesday its offer for Delta Air Lines Inc. ((DALRQ)) by 20% to $10.2 billion after the first bid, valued at $8.4 billion, was rejected by the bankrupt airline. The increased bid amounts to $5 billion in cash and 89.5 million shares of US Airways stock. The original offer included 78.5 million shares of US Airways stock and $4 billion in cash. The value of the improved bid is expected to go even higher if US Airways'' stock gains after market opening.

US Airways said the increased offer is set to expire on February 1 unless creditors indicate support for the start of the due diligence process, which would open up Delta''s books to US Airways. US Airways also wants Delta to postpone a February 7 bankruptcy hearing.

Executives of airline Delta have expressed disapproval of a buyout by US Airways. The nation''s third-largest carrier has filed a reorganization plan that calls for it to emerge from bankruptcy by the middle of 2007 as a standalone company worth $9.4 billion to $12 billion. Although Delta management stands against the deal, the key role in deciding the airline''s future course will be played by the unsecured creditors committee.