US STOCKS-Wall St set for higher open as oil slips
18 Agustus 2008 19:58:09 (GMT+07:00)
Provided by: Reuters News
* Oil slips as supply worries dissipate
* Lowe's tops Q2 estimates, stock inches up
* Geopolitical worry ebbs after Musharraf's resignation
* JPMorgan advises short energy, buy financials
(Recasts first paragraph, updates prices)
By Ellis Mnyandu
NEW YORK, Aug 18 (Reuters) - U.S. stocks headed for a higher open on Monday
as oil prices retreated and an easing of geopolitical concerns surrounding
Pakistan's government underpinned sentiment.
U.S. front-month crude backed off from an earlier $115.35 a barrel as supply
fears related to Tropical Storm Fay ebbed. The storm was set to miss major
offshore oil and gas production in the Gulf of Mexico and appeared to be
targeting the west coast of Florida.
Stronger-than-expected profit from Lowe's Cos Inc <LOW.N> , the No. 2 U.S.
home improvement chain, also added to the positive tone. Lowe's shares rose
2.2 percent to $25.05. Earlier they had dipped 2 percent before the bell
because the company's forecast for third-quarter earnings missed
expectations.
The resignation of Pakistan's beleaguered President Pervez Musharraf eased
worries of political turmoil in the nuclear-armed country. For details, see
[nSP251857].
"We were a little higher in oil prices earlier, and oil now seems to have
come off a little bit, which helps the tone," said Peter Cardillo, chief
market economist at Avalon Partners in New York. "The other positive is that
the geopolitical concerns we had last week are beginning to wane."
S&P 500 futures <SPc1> rose 4 points and were above fair value, a formula
that evaluates pricing by taking into account interest rates, dividends and
time to expiration on the contract.
Dow Jones industrial average futures <DJc1> climbed 25 points and Nasdaq 100
<NDc1> futures gained 7 points.
Lowe's reported a lower second-quarter profit as consumers took on fewer
big-ticket remodelings during the housing slump, but the company still beat
analysts' estimates on profit and sales.
Broadcom Corp <BRCM.O> shares jumped 3 percent to $28.30 before the bell
after Barron's newspaper said in a report the stock could gain as much as 40
percent as the chip-maker grabs part of the "smartphone" market.
[nN17385425]
In housing-related news, the U.S. Treasury is increasingly likely to
recapitalize home finance providers Fannie Mae <FNM.N> and Freddie Mac
<FRE.N> in the months ahead on the taxpayer's dime, Barron's newspaper said
in its Aug. 18 edition. Fannie shares fell 8.3 percent to $7.25 and Freddie
shares dropped 8.6 percent to $5.35 before the bell. [nN17477836]
Even so, J.P. Morgan Securities' U.S. equity strategists said they saw
opportunity in going "short" energy and "long" financials, as capital flows
and macro developments are likely to be less favorable to energy relative to
financials.
Analysts led by Thomas Lee downgraded the U.S. energy sector to "neutral"
from "overweight," and said the next two years will see a shift toward a
long financials trade. [ID:BNG102022]
U.S. crude oil futures <CLc1> fell 25 cents to $113.54 a barrel.
Musharraf, the former army chief and firm U.S. ally, has seen his popularity
slide over the past 18 months and has been isolated since his allies lost a
February election. He announced his resignation on Monday.
(Editing by Kenneth Barry)
