Stock poised to rally after payroll report, Fed action
NEW YORK -- Wall Street was poised for a sharply higher open Friday after the government reported that the nation's payrolls shrank less than expected and the Federal Reserve injected more liquidity into the financial system.
The Labor Department said employers cut 20,000 jobs in April, while the unemployment rate dipped to 5 percent. This marked the fourth straight month of job losses, but the data signaled that perhaps the economy might be resisting falling into recession.
Meanwhile, the Fed said it will work with European central banks to expand a series of efforts to deal with the global credit crisis. The central bank will boost the amount of emergency reserves it supplies to U.S. banks to $150 billion in May, up from the $100 billion it supplied in April.
Investors are expected to rush back into the market amid speculation that the government has a better handle on the economy and the global credit crisis that has pummeled markets. It also increased speculation that the Fed, which cut interest rates by a quarter point on Wednesday, would indeed pause in its interest rate cutting campaign.
Dow Jones industrial average futures rose 113, or 0.92 percent, to 13,114. Standard & Poor's 500 index futures rose 13.40, or 0.95 percent, to 1,425.00; and Nasdaq composite futures rose 21.50, or 1.08 percent, to 2,004.75.
Wall Street rallied Thursday as investors viewed the rising dollar and falling oil prices as promising signs for the economy. The Dow industrials soared nearly 190 points to close above 13,000 for the first time since Jan. 3.
Bond prices moved sharply lower as investors moved back into stocks, and amid speculation the Fed will end its cycle of interest rate cuts. Government debt is among the safest investments during periods of a weakening economy.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, rising to 3.85 percent from 3.77 percent late Friday. Treasury prices plunged Thursday amid a run-up in stocks.
Oil prices moved higher after retreating Thursday on a strengthening dollar. Light, sweet crude rose 88 cents to $113.40 a barrel in electronic trading on the New York Mercantile Exchange.
In corporate news, Sun Microsystems Inc. shares slid 16 percent to $13.70 in premarket trading after the company stunned investors late Thursday by reporting a loss for the third quarter. The server and software maker blamed the loss on sagging sales to U.S. consumer-oriented companies that are delaying big-ticket spending.
Viacom Inc. said Friday that first-quarter profit rose 33 percent on stronger results at its cable networks and the Paramount movie studio. Military contractor and construction and engineering firm KBR Inc. said first-quarter profit more than doubled, helped by a gain from an arbitration award.
Microsoft Corp. may go hostile in its bid for Yahoo Inc. as soon as Friday, according to a report in The Wall Street Journal. The world's largest software is expected to announce it will go straight to Yahoo's shareholders to try and buy the company.
Overseas, Japan's Nikkei stock average rose 2.05 percent. In morning trading, Britain's FTSE 100 rose 1.02 percent, Germany's DAX index added 1.09 percent, and France's CAC-40 rose 1.69 percent.