Stock head for lower open ahead of pending home sales data

Wednesday, May 07, 2008 - 12:59 PM

By MADLEN READ
AP Business Writer

NEW YORK

Wall Street headed for a modestly lower open Wednesday, with investors awaiting data on pending home sales and watching oil prices climb further into uncharted territory.

At 10 a.m. EDT, the National Association of Realtors is expected to report that pending sales of existing homes declined in March, according to economists surveyed by Thomson Financial/IFR.

Ahead of that report, the Labor Department said worker productivity, measured by output per hour of work, rose at a higher-than-expected annual rate of 2.2 percent in the first quarter. It also said unit labor costs increased at an annual rate of 2.2 percent, down from a 2.8 percent rise in the previous quarter _ suggesting that inflation pressures may be letting up.

But inflation remains a prime concern on Wall Street, given that oil prices have doubled over the past year to record levels above $122 a barrel on Tuesday. As a result, gasoline prices are also surging further into record terrain, strapping debt-laden U.S. consumers with another financial burden. Kansas City Federal Reserve President Thomas Hoenig in a speech late Tuesday cited inflation as his main worry.

The stock market will be closely watching the energy market´s reaction Wednesday to the government´s weekly report on U.S. fuel inventories. In premarket electronic trading Wednesday on the New York Mercantile Exchange, light, sweet crude futures fell 11 cents to $121.73 a barrel after reaching a record $122.73 overnight.

Dow futures fell 24, or 0.18 percent, to 13,004. Standard & Poor´s 500 index futures fell 2.70, or 0.19 percent, to 1,418.00, and Nasdaq 100 index futures fell 6.25, or 0.31 percent, to 1,992.75.

The stock market rose moderately Tuesday despite the surge in oil prices, as bargain hunters bought up pummeled financial and housing-related stocks in the hopes for a late-2008 economic rebound.

In early trading Wednesday, gold prices fell, while the dollar rebounded against other major global currencies.

Bond prices edged lower after the worker productivity and cost data. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.94 percent from 3.92 percent late Tuesday.

In corporate news, Clearwire and Sprint Nextel Corp. are planning to merge their wireless broadband units to create a new $14.55 billion wireless communications company. The new company is getting a $3.2 billion investment from Intel Corp., Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks.

Clearwire rose 11 percent in pre-market trading, while Sprint rose 5.6 percent.

Overseas, Japan´s stock market rose 0.38 percent. By afternoon trading in Europe, Britain´s FTSE index rose 0.48 percent, Germany´s DAX index rose 0.80 percent, and France´s CAC-40 rose 0.59 percent.

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