Stocks are set to open lower Thursday after economic data showed an unwelcome combination of rising inflation but slower economic growth. Fifteen minutes before the opening bell on Wall Street, stock index futures indicated that the Dow Jones Industrial Average ($INDU) could lose 40 or 50 points in early trading. The NASDAQ ($COMPQ) is expected to open lower as well.
Prices on the wholesale level rose much more than expected last month, according to the latest statistics from the Labor Department. The Producer Price Index [PPI], which tracks the prices paid by wholesalers for a basket of goods, rose 1.3% in February. Economists were looking for a .5% gain. Excluding food and energy, the core PPI rose .4%, and two times faster than economist forecasts.
Meanwhile, the New York Empire State Index plunged in March. The index of regional manufacturing index fell from 24.4 in February to only 1.9. Economists were looking for a reading of 17.
On a brighter note, the latest weekly jobless claims came in a bit better than expected. According to the Labor Department, the number of filings for jobless benefits fell by 10,000 to 318,000 in the week ended March 10. Economists were looking for a decline to 325,000. However, given the day's other economic news, the weekly claims data didn't help much. Stock index futures fell into the red when the data were released.
Exchange stocks might buck the bearish trend early Thursday, however, after the Intercontinental Exchange (ICE) made an offer for the Chicago Board of Trade (BOT), which rivals a recent bid from the Chicago Mercantile Exchange (CME). BOT is up 15.6% in pre-market action.
In other stock news, PHH Corp. (PHH), a mortgage company, is set to open higher after GE and Blackstone announced plans to buy the company for $18 billion. Bear Stearns (BSC) is out with quarterly earnings of $3.82, which was in-line with analyst estimates. However, the broker's revenues came up a bit shy of expectations. Biovail and Winnebago (WGO) are out with better then expected profit reports. Borland Software (BORL) posted a 14-cent loss, which was six cents worse than expected.
In other markets, crude is up 16 cents to $58.32 a barrel ahead amid a meeting of OPEC officials in Austria today. The inflation data has given gold (April) a bit of a boost. Gold is up $4.00 to $646.60 an ounce. But the news sent bonds a lower. The benchmark ten year Treasury is down 3 ticks, pushing its yield to 4.53%. The buck is little changed.
For stocks, the economic data is not good news. While the NY Empire State index suggests that the economy might be cooling more than expected, the strong inflation numbers make it less likely that the Federal Reserve will cut rates and help the ailing housing sector. As a result, stock index futures are moving lower and the table is set for another round of selling on Well Street Thursday morning.
Frederic Ruffy
Senior Writer
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