By Steve Goldstein, MarketWatch
Last Updated: 8:38 AM ET Dec 21, 2005
(MarketWatch) -- U.S. stock market futures on Wednesday rose on
hopes that gains wouldn't erode by the end of the session, as has happened
earlier this week. Gains in overseas markets and M&A activity also lent
support, and a downward revision to third-quarter economic growth data
didn't move markets.
S&P 500 futures rose 3.5 points at 1,271.40 and Nasdaq 100 futures rose 5
points at 1,684.5.
On Tuesday, the Dow industrials ended 31 points lower, the Nasdaq
Composite was off 0.3 of a point at 2,222 and the S&P 500 closed 0.3 of a
point lower at 1,259.
That's in line with December's lackluster performance, with the S&P 500 up
by less than one percentage point and the Nasdaq Composite down a touch.
But some M&A activity lent support to Wednesday's advance.
Allergan agreed to pay more than $3 billion for Inamed, sealing a deal
that topped Medicis Pharmaceutical's first bid.
Seagate Technology offered $1.9 billion in shares for Maxtor Corp., a hard
disk making rival, that values each share at a 60% premium to Tuesday's
close. Maxtor shares rocketed 48% in pre-open trade, while Seagate fell
more than 2%. See story.
Arden Realty, a Southern California real estate investment trust valued at
more than $3.1 billion, is near a deal to be bought by General Electric
and other investors, The Wall Street Journal reported Wednesday, citing
people familiar with the situation. The report didn't identify GE's
partners.
International Business Machines said it will buy Micromuse for $865
million in cash, or $10 a share. Micromuse shares rallied 37% in the
pre-open.
Google Inc. shares edged up to $432.96 in pre-market trade, following the
as-expected deal to pay $1 billion for a 5% stake in Time Warner's America
Online division.
On the data front, third quarter U.S. growth increased at a 4.1% rate,
slightly lower than previous estimates of a 4.3% growth rate, the Commerce
Department said Wednesday. The downward revision was unexpected by Wall
Street economists, who had forecast Q3 GDP to be unrevised at a 4.3% rate.
The second revision to real gross domestic product in the July-September
quarter found a downward revision to consumer spending.
Inflation measures were revised slightly higher; the core personal
consumption expenditure price index increased at a revised 1.4% annual
rate, up from the previous estimate of a 1.2% increase. Corporate profits
were revised lower.
The dollar was relatively unmoved by the economic data.
Elsewhere, power generator Calpine filed for Chapter 11 bankruptcy
protection, an expected move as its debt burden mounted.
General Motors fell 2.6% in the pre-open, beneath Tuesday's 18-year low,
after Kirk Kerkorian trimmed his stake to 7.8% from 9.9%.
FedEx Corp. beat earnings estimates with a second-quarter profit of $471
million, or $1.53 a share, on a 10% rise in revenue to $8.09 billion. It
also lifted its fiscal year earnings outlook.
In other late Tuesday announcements that may impact on Wednesday, Palm
Inc. posted better fiscal second-quarter profit than forecast, while
Electronic Arts warned that third- and fourth-quarter results wouldn't
meet forecasts.
Electronic Arts fell 0.8% in the pre-open, and the warning from EA hurt
European video games makers such as Paris-listed Infogrames and Ubisoft.
But European equities were broadly well bid, with the FTSE 100 hitting
another four-year high after one member of the Bank of England wanted an
interest-rate cut in December, and the Nikkei 225 in Tokyo advanced as
well, touching the 16,000 level at one point during the session.
Front-month crude oil contracts were up 23 cents at $58.32 a barrel, ahead
of data expected to show a decline in U.S. crude inventories.
This MarketWatch update is provided courtesy of Thomson Financial.
This is Thomson Financial's Market Commentary, which is issued three times
daily; Pre-Open ( 9:00 a.m.), Post-Open (10:15 a.m.), and Close (5:00
p.m.). The information herein is believed to be true and accurate. We
take no responsibility for inaccurate information and reserve the right to
update our reports. If you have any questions please e-mail James Sang at
james.sang@tfn.com or call 646.822.6233. For more information about
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SOURCE Thomson Financial Corporate Group
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