By TIM PARADIS, AP Business Writer
NEW YORK - U.S. stocks headed for a strong opening Friday as investors
appeared relieved that Wall Street had managed to show back-to-back rallies
after mostly upbeat news.
A bright forecast late Thursday from Microsoft Corp. and quarterly results
that far outpaced expectations lent strength to a notion emerging in recent
days that perhaps Wall Street had been too pessimistic in its reading of the
economy.
Investors looking for reasons to buy also appeared cheered by reports from
U.K. newspapers that billionaire Wilbur Ross was in talks to acquire
troubled bond insurer Ambac Financial Group Inc. Financial woes at many U.S.
bond insurers have in recent weeks caused headaches for investors worldwide
who have worried that the credit crisis could worsen should one of the
companies buckle under an inability to draw new business.
Word of Ross' interest follows comments this week by New York State
regulators saying they would consider lending support to shore up the
struggling bond insurance industry. The move helped reassure Wall Street and
helped make room for stocks to rally in recent days.
Dow Jones industrial average futures rose 80, or 0.65 percent, to 12,445.
Standard & Poor's 500 index futures rose 10.90, or 0.81 percent, to
1,363.10, and the Nasdaq composite index rose 23.50, or 1.28 percent, to
1,860.50.
Bond prices fell as stocks looked to open stronger. The yield on the
benchmark 10-year Treasury note, which moves opposite its yield, rose to
3.72 percent from 3.71 percent late Thursday.
The dollar was mixed against other major currencies.
Investors overseas also appeared pleased by the two-day U.S. rally, which
sent the Dow up by more than 400 points.
In afternoon trading, Britain's FTSE 100 rose 1.10 percent, Germany's DAX
index rose 1.70 percent, and France's CAC-40 rose 1.34 percent.
Earlier, Japan's Nikkei stock average jumped 4.10 percent after falling
sharply earlier in the week. Hong Kong's Hang Seng index likewise surged
6.73 percent by the close.
The gains come as former Federal Reserve Chairman Alan Greenspan weighed in
on the state of the U.S., telling the Financial Times it isn't certain that
the U.S. will tip into recession even though the economy might not be
growing.
Greenspan's comments come as the latest corporate news paints a mixed
picture of the economy.
Diversified manufacturer Honeywell International Inc. late Thursday reported
fourth-quarter sales growth that handily topped Wall Street's expectations.
The company forecast weaker global economic conditions for the year but said
it still expects to report double-digit growth in per-share earnings.
Caterpillar Inc., which like Honeywell, is one of the 30 companies that make
up the Dow industrials, warned it sees "anemic growth" in the U.S. economy
but said it sees "positive conditions" for its sales in most other markets.
The maker of construction equipment said its fourth-quarter earnings rose 11
percent amid strong international growth.
Harley-Davidson Inc. said Friday its fourth-quarter earnings fell 26.3
percent as motorcycle sales weakened in the U.S. amid a slowing economy.
Wall Street's optimistic tone stands in contrast to the dour mood that hung
over the market early in the week. While U.S. markets were closed Monday for
Martin Luther King Jr. Day, stocks in Asia and Europe plunged amid fears of
a precipitous slowdown in the U.S. economy. To stave off a similar fall in
the U.S. amid recession fears, the Fed on Tuesday stepped in with an
emergency rate cut. Lowering rates by a big 0.75 percentage point, or 75
basis points, to 3.5 percent helped shore up investors' confidence and
likely helped stocks pull off sharp lows to end the day with comparatively
moderate losses. A day later, stocks showed a stunning turnaround,
converting a sharp sell-off into huge gains for the day. Stocks then
extended their gains Thursday.
Given the volatility that has descended upon Wall Street in recent months
and particularly this week, it remains unclear whether the market's gains
would hold through Friday. With no major economic news scheduled to arrive,
investors focused on corporate developments and looked to next week when the
Fed is expected to hold its first regularly scheduled meeting of the year
and when the Labor Department plans to weigh in on the state of the job
market.
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"Impeachment is off the table" Nancy Pelosi
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