Before the bell: Futures decline after oil surges, Sears reports

Posted Nov 29th 2007 7:48AM by Melly Alazraki
Filed under: Before the Bell, International Markets, Earnings Reports, Dell (DELL), Market Matters, Sears Holdings (SHLD), Economic Data, Oil, Housing, Federal Reserve

Stocks seemed to start lower this morning after stock futures changed direction from earlier gains and turned negative. While most of yesterday's rally was due to rate cut hopes, the decline in oil prices only served to boost stocks. This morning, however, oil prices jumped over $4 a barrel and Sears reported much weaker-than-expected earnings, offsetting the uplifted mood from the rate cut hint. Several economic indicators will affect trading and many on Wall Street may sit on the sideline, awaiting Federal Reserve Chairman Ben Bernanke speech due at 7 p.m. EST.

Yesterday, U.S. stocks rallied for a second day in a row with the Dow Jones Industrial Average posting a two-day rise of 546 points. Yesterday Fed's vice chairman, Donald Kohn made a speech, hinting at a rate cut. The Dow consequently rose 331 points, or 2.55%, the S&P 500 rose 40 points, or 2.86%, and the Nasdaq Composite added 82 points, or 3.18%.

Several economic indicators are due today:

At 8:30 a.m., the Commerce Department is set to report preliminary GDP for the third quarter. This is the first revision of its reading on the nation's overall economic growth in the third quarter. Economists are forecasting GDP rose 4.9% in the quarter, up from a previous reading of 3.9% growth. Such a rate would be he best pace of economic growth in four years, despite calling for a much slower growth in the fourth quarter due to a weak housing sector and problems with the credit markets.
Weekly jobless claims are also due at 8:30 a.m. EST.
At 10:00 a.m. EST, the Census Bureau reports on October new home sales. Economists are looking for the annual pace of sales to fall to 750,000 from 770,000 in September. This comes after yesterday, a reading of existing home sales showed the biggest year-over-year drop in prices ever recorded.

No doubt, this morning the market is turning its attention once again to oil as oil prices jumped more than $4 Thursday, back above $94 a barrel, after a fire erupted at a pipeline carrying crude oil from Canada to the U.S. Midwest. While it wasn't clear how the fire and the shutdown of five pipelines would affect supplies, the pipeline supplies nearly a fifth of the import from Canada.

Not affected by the oil price surge, Asian markets closed sharply higher, following Wall Street's rally. European markets, however, were mixed.

A report this morning showed the continued struggle of home owners as foreclosure filings nearly doubled in October. The RealtyTrac report said more people could lose their homes in 2008.

In corporate news:

Sears Holdings (NASDAQ: SHLD) reported a 99% plunge in earnings this morning, widely missing estimates.
E*Trade (NASDAQ: ETFC) will get a much needed $2.55 billion cash boost from Citadel Investment Group LLC.
Dell (NASDAQ: DELL) is the last of tech bellwethers due to report today after the close. Analysts surveyed by Thomson Financial estimate Dell will earn 35 cents a share on $15.35 billion in revenue.

Tags: dell, etfc, featured, shld