Wall Street set to rise on stronger economic data
NEW YORK (Reuters) - Stocks index futures pointed to a higher open on Thursday after a better-than-expected final reading for second quarter U.S. growth and a fall in claims for jobless benefits lifted confidence in the economy.
The U.S. economy grew 1.7 percent in the second quarter, compared with the 1.6 percent previously estimated due to upward revisions to consumer spending and business inventories. Higher growth was complemented by a bigger-than-expected drop in jobless claims last week.
Underscoring hopes that the economy was on a firmer footing than originally feared, business activity in New York City rose in September for the first time in four months, according to the Institute for Supply Management's New York survey.
"What that means for investors is that the more and more of this type of data, the more evident it will become that the risk of a double dip recession is almost nonexistent," said Oliver Pursche, executive vice president at Gary Goldberg Financial Services in Suffern, New York
S&P 500 futures rose 6.6 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 53 points and Nasdaq 100 futures added 9.75 points.
The S&P 500 has gained over 9 percent so far this month, helped by signs of stabilization in the economy and hopes the Federal Reserve will take extra steps to spur the recovery.
With the first round of Thursday's data out of the way, investors will turn their attention to September's Chicago PMI survey at 9.45 a.m. (1345 GMT). Both the New York and Chicago surveys are seen as early indicators ahead of national reports on Friday and later next week
Bernanke will testify before a Senate Banking Committee hearing on implementing the recently passed financial regulation act and investors will be on the look out for any reaction in financial shares.
"We're going to be watching the banks pretty closely," said David Lutz, managing director of trading, Stifel Nicolaus Capital Markets in Baltimore. Lutz said that uncertainty over the regulation may have been weighing on financial stocks in recent days.
Performance chasing at the end of the quarter also could help lift indexes as fund managers attempt to dress up their portfolios by adding to wining stocks and selling losers.
In corporate news, Shares of American International Group Inc jumped 11.6 percent to $41.85 in premarket trading after the company and the U.S. government agreed on a plan that would see the insurer repay taxpayers fully for bailing it out at the height of the financial crisis.
Shares of Prudential Financial Inc fell 3.6 percent to $54.50 after the company agreed to buy two Japanese life insurance units from AIG for $4.2 billion.
(Reporting by Edward Krudy; Editing by Theodore d'Afflisio)