Stocks head to higher open
NEW YORK -- U.S. stocks headed toward a sharply higher open Wednesday after a pair of reports indicated the economy is in good shape, yet still left room for an interest rate cut.
Stock futures rose after a report showed hiring in the U.S. private sector expanded at a faster pace in November. ADP Employer Services said 189,000 jobs were added during the month -- an increase that bodes well for consumer spending.
Investors were also encouraged after the Labor Department reported worker productivity advanced by an annual rate of 6.3 percent in the summer, the fastest pace in four years, while wage pressures eased.
Wall Street is waiting for gauges on factory orders and manufacturing later this morning. This week's economic reports are expected to be closely watched by the Federal Reserve, which meets next Tuesday.
It is widely expected central bankers will lower rates to help pump up the economy and head off a recession. However, some investors are betting the Fed will go beyond the generally anticipated quarter percentage point cut, and lower rates by a half point.
Further, central banks globally appear to be more open to interest rate cuts, a trend that would give the Fed more room to move. The Bank of Canada cut rates on Tuesday, while the Bank of England and European Central Bank will make rate decisions on Thursday.
Dow Jones industrial average futures rose 135, or 1.02 percent, to 13,397. Standard & Poor's 500 index futures rose 16.10, or 1.10 percent, to 1,479.40, and the Nasdaq composite index added 28.00, or 1.36 percent, to 2,090.25.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.93 percent from 3.88 percent late Tuesday. The dollar was higher against other major currencies, while gold prices rose.
OPEC decided Wednesday to keep output ceilings steady for now, in a move that briefly propelled crude prices above $90 a barrel. Wall Street is also waiting for government data that is forecast to show that crude oil inventories fell last week for the third straight week.
Light, sweet crude rose $1.44 to $89.76 per barrel in premarket electronic trading on the New York Mercantile Exchange.
Fannie Mae has joined rival mortgage financer Freddie Mac in cutting its dividend and selling special stock to raise capital. The government-sponsored lender hopes to cushion against mounting losses from high-risk home loans.
Comcast Corp. shares are expected to fall during the regulator session. The cable operator said it won't generate as much cash flow and revenue for the year because of a difficult economic environment.
Economists expect a report on business activity in the service sector to show slower growth than the previous month, due to pressure in the real estate, financial and shipping sectors. The Institute for Supply Management, a trade group of purchasing executives, will release its index of non-manufacturing business activity for October at 10 a.m. EST.
Commerce Department figures are also expected to show factory orders in October were flat as concerns about the nation's economy's health hurt demand for manufactured goods. The data is due out 10 a.m. EST.
Overseas, Japan's Nikkei stock average closed up 0.83 percent, while Hong Kong's Hang Seng index rose 1.61 percent. Britain's FTSE 100 added 1.34 percent, Germany's DAX index rose 0.79 percent, and France's CAC-40 increased 0.87 percent.
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