Before the bell: Futures higher following deal news; investors await Fed move
Posted by: in Latest NewsFiled under: Before the bell, Earnings reports, Deals, Microsoft (MSFT), Yahoo! (YHOO), Berkshire Hathaway (BRK.A), Market matters, Wrigley, (Wm) Jr (WWY), Verizon Communications (VZ), Contl Airlines’B’ (CAL), UAL Corp (UAUA), Tyson Foods’A’ (TSN), Economic data, Federal Reserve
Stock futures got a boost this morning from a possible $22 billion deal as Buffett’s Berkshire and Mars think about buying Wrigley. Also in on investors’ mind is this week’s Federal Reserve meeting and rate decision as well as oil nearing $120 a barrel again.
U.S. stocks completed mixed on Friday, with the Dow industrials rising 42 points, or 0.33%, and the S&P 500 up 9 points, or 0.65%. The Nasdaq composite, however, found itself in the red following a cautious outlook from Microsoft the day before, and finished the day down almost 6 points, or 0.25%.
Without much economic news this day, investors will focus on the Federal Reserve Open Market Committee two-day meeting starting Tuesday. On Wednesday, Fed chairman Bernanke will announce the policy decided and most economist expect a quarter point rate cut, but also for the Fed to stop the cuts after that as inflationary pressures have been rising.
Also, attention will be on oil prices, which once again hit an all-time high of $119.93 a barrel Monday. A refinery strike closed a pipeline system that delivers a third of Britain’s North Sea oil to refineries in the U.K. as well as supply outages in Nigeria have caused oil to climb again despite the strengthening dollar.
Another big new item this morning, and one that helped boost sentiment is that of Mars and Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) nearing a deal to purchase chewing gum giant Wm. Wrigley Jr. (NYSE: WWY) for more than $22 billion, according to The Wall Street Journal and The New York Times. Wrigley, which has a market capitalization value of roughly $13.6 billion, is seeing its shares climbing over 23% in premarket trading.
Still in deal news, Microsoft (NASDAQ: MSFT) and Yahoo! (NASDAQ: YHOO). The deadline the software giant gave the internet portal passed on Saturday. As there was no announcement from either side, this leaves Microsoft with two choices, walk away from the deal or engage in a huge hostile takeover battle.
And one more item in deal news concerns Continental Airlines Inc. (NYSE: CAL), which said late Sunday it would not be part of any merger in the near future. Many who have speculated the airline could join forces with United Airlines (NASDAQ: UAUA) were surprised. Shares of CAL are down over 5% in premarket trading.
And it’s earnings season with Verizon (NYSE: VZ) and Tyson Foods (NYSE: TSN) reporting today.
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