Cautious buying seen

[notiCIas]

Cautious buying seen

Stocks set to open modestly higher Thursday as investors eye BofA-MBNA deal, Fed.

June 30, 2005: 7:12 AM EDT

NEW YORK (CNN/Money) - Stocks were poised to open slightly higher Thursday as investors digested Bank of America's $35 billion deal to acquire MBNA ahead of an anticipated interest rate hike by the Federal Reserve.

U.S. stock futures were modestly up in early trading, indicating a higher opening for stocks.

In corporate news, Bank of America (Research) said it agreed to buy MBNA Corp. for about $35 billion. The deal will make Bank of America the largest U.S. credit card issuer.

The Fed is expected to boost the fed funds rate, an overnight bank lending rate, another quarter percentage point to 3.25 percent, which would be the ninth straight increase since last June.

Many Fed watchers expect another quarter-point hike in August.

Oil prices inched higher, bouncing up after two days of backing down from record highs. Oil prices fell Wednesday after a government report showed that crude oil and gasoline inventories posted an unexpected rise.

The August light crude contract gained 8 cents to $57.34 a barrel in electronic trading, while the August contract for Brent crude was unchanged at $56.15.

On Monday, U.S. crude prices settled at a record $60.54.

Major markets in Asia closed mixed Thursday, and major European markets were soft in early trading as investors around the world anticipated that the Fed would raise interest rates later in the day.

Despite robust earnings from software giant Oracle and a government report showing faster-than-expected economic growth in the first quarter, the market stalled Wednesday in anticipation of the Federal Reserve statement Thursday afternoon.

Treasury prices were little changed, leaving the yield on the 10-year note at 3.99 percent. The dollar barely budged against the euro and the yen.

In key economic news Thursday, investors are watching for unemployment and consumer readings.

The initial jobs report for the week ended June 18 is expected to show unemployment claims rose to 325,000, up from 314,000 the previous week, according to economists surveyed by Briefing.com.

Figures on May personal income and spending are also due Thursday. Income is expected to have grown by 0.3 percent after rising 0.7 percent in April. Spending is expected to have held steady after gaining 0.6 percent in April. The spending component's key inflation gauge, the core PCE deflator, is expected to be up 0.1 percent after rising at the same pace in April.

Boeing (Research) is expected to name a new chairman and chief executive officer, unnamed sources told The Wall Street Journal. James McNerney, a Boeing board member and the chairman and CEO of 3M (Research), would replace Harry Stonecipher, who was fired in March after admitting an affair with a female executive that broke company rules.