WALL STREET OUTLOOK Lower ahead of inflation data; GE, Merck & Apple in focus

WALL STREET OUTLOOK Lower ahead of inflation data; GE, Merck & Apple in focus

	Published : Fri, 13 Apr 2007 13:04 By : Agencies Print this Story

LONDON (Thomson Financial) - Wall Street is looking at a lower open amid some caution ahead of inflation data, with investors also mulling an in-line quarterly report from General Electric and a raised earnings outlook from fellow blue-chip Merck.

Apple, meanwhile, may come under pressure after it said it be would delaying the launch of Leopard, its new computer operating system.

Spread bettors IG Index expect the Dow Jones Industrial Average to open around 15 points lower at 12,538.

Yesterday, stocks ended higher after a see-saw session in which investors weighed the possibility of further interest rates increases following a sharper-than-expected rise in import prices and a fresh jump in crude.

Investors will be paying close attention to the latest producer price report given the minutes of the Federal Reserve's last meeting on interest rates where central bankers continued to express concern about inflation.

Wholesale inflation is forecast to have risen 0.8 pct in March after rising 1.3 pct in the previous month, according to economists polled by Thomson's IFR Markets.

Core inflation, which excludes volatile food and energy prices, is seen ticking up 0.2 pct after a 0.4 pct gain in February. The report is due out at 13.30 pm BST.

The Commerce Department meanwhile is expected to report that the US trade deficit widened to 60 bln usd in February from 59.1 bln usd in January, according to IFR Markets.

Just after the market opens, the University of Michigan releases its monthly survey on consumer sentiment.

Oil prices rose on concern supplies could be constrained by a series of refinery incidents just weeks before the start of the US driving season that will prompt a spike in gasoline demand.

New York light sweet crude for May delivery was up 42 cents at 64.27 usd a barrel.

The US dollar tumbled against its major counterparts as investors became increasingly worried about the outlook for US economic growth.

Analysts said sentiment towards the dollar has turned very negative, with little prospect of the US Federal Reserve raising interest rates despite rising inflationary pressures, in contrast to central banks elsewhere.

'Sentiment on the dollar remains extremely weak and the dollar index is currently at its lowest level in two weeks,' analysts at BNP Paribas said.

The euro was last up 0.4 pct at 1.3541 usd, its best level in over two years. Against the Japanese yen, the greenback fell 0.6 pct to 118.32.

In company news, General Electric should see active trading after the industrial conglomerate and Dow component reported first-quarter profit of 44 cents per share, matching Wall Street projections.

Also on the blue-chip index, shares in Merck were up 3.6 pct at 48.02 usd in thin pre-market trading after the pharmaceutical group boosted its full-year outlook and said first-quarter results will exceed Wall Street expectations due to strong revenue across its products. Broker Goldman Sachs upgraded the company in the wake of its raised outlook.

In a separate development, a US Food and Drug Administration panel overwhelmingly opposed marketing approval for Merck's new anti-inflammatory drug to treat arthritis, a spokesman for the regulator said.

Shares in Apple Inc are set to move lower after the maker of the iPod digital music player and Apple Mac computers said it would delay the launch of its new operating system Leopard to October from June.

Broker Merrill Lynch recommended investors buy on any dip in the company's share price, saying the delayed launch represents just a temporary setback for the company.

Shares in Lam Research Corp are likely to move higher out of the gate after the chip equipment maker's quarterly results topped analyst estimates.

On the corporate takeover front, student lender SLM Corp, better known as Sallie Mae, is in talks to be bought out by private equity in a deal that could be valued at over 20 bln usd, the New York Times reported, citing people familiar with the discussions.

Mark.cotton@thomson.com

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