U.S. Stock Futures Rally on Rate Optimism

Elena
31 Aug, 2007
New York City

U.S. stock futures pointed to a sharply higher opening Friday, boosted by optimism that Chairman Ben Bernanke will give a clue about interest rate cuts in his speech. Investors were also optimistic because President Bush is expected to announce strategy to aid borrowers struck by the housing market slump to keep their homes. Mortgage lender Countrywide Financial surged 6.3% in the pre-open. Traders also digested data on personal income and spending.

[R]09:00AM U.S. stock futures rallied, boosted by rate optimism.[/R]

U.S. stock futures pointed to a sharply higher opening of Friday trading session, boosted by optimism that Chairman Ben Bernanke will give a clue about interest rate cuts in his speech. The financial futures markets expect one and even two reductions of the key interest rate by the end of September.

Investors were also optimistic because President Bush is expected to announce strategy to aid borrowers struck by the housing market slump to keep their homes. Mortgage lender Countrywide Financial ((CFC)) surged 6.3% in the pre-open, while Accredited Home Lenders ((LEND)) soared 38% after Lone Star Funds said it will offer $214 million for the firm, which is 44% less than it first offered for the troubled lender.

On the earninfs news front, Dell ((DELL)) rose 1.9% in pre-open trade after it reported a 46% profit rise and a 5% revenue gain, beating analyst estimates.

Traders also digested economic data which showed that inflation remained cool while household incomes and spending strengthened in July. Personal incomes and spending rose 0.5% and 0.3%, respectively, while core PCE remained at 1.9%.

Dow Jones industrials futures expiring in September rose 101, or 0.76%, to 13,380, while Standard & Poor's 500 index futures rose 14.60, or 1.00%, to 1,476.20. Nasdaq 100 index futures rose 17.75, or 0.90%, to 1,992.50.


[R]8:00AM Computer maker Dell posted 46% profit increase in Q2.[/R]

Computer maker Dell Inc. ((DELL)) advanced 2.4% in pre-market trading after it reported positive Q2 results, prompting it is trying to regain stability and lost positions in the computer industry. According to preliminary results released after the closing bell Thursday, Dell’s quarterly earnings jumped 46% to $733 million, or 32 cents per share, compared with $502 million, or 22 cents per share a year ago.

The profit increase was attributed to stronger sales of business products and services, improved average selling prices and lower component costs. Sales rose 4% to $14.8 billion. The quarterly financial results exceeded analyst expectations of earnings of 30 cents per share on sales of $14.63 billion. Dell said results were dragged down 5 cents per share by a $102 million charge for payments for expired stock options. Another $59 million was related to the internal probe, which found that Dell employees had misled auditors and manipulated results to meet performance.