Futuros EUA negativos: Stocks on inflation, oil watch again

[notiCIas]

Stocks on inflation, oil watch again

Stock futures lower ahead of report on personal income and spending that will give investors concerned about how high the Fed will hike rates their latest reading on inflation pressures.

March 31, 2006: 6:30 AM EST


NEW YORK (CNNMoney.com) - Investors will be on inflation watch again Friday, as the direction of trading on the last day of the quarter could be set by the latest economic readings.

Stock futures were down in early trading, indicating a lower open for U.S. stocks following Thursday's sell-off on a higher than expected inflation reading in the final fourth quarter gross domestic product reading.

At 8:30 a.m. ET the government is set to release its personal spending and income report, which includes the Commerce Department's latest reading on prices being paid by consumers.

Economists surveyed by Briefing.com forecast that personal income was up 0.4 percent in February, after a 0.7 percent gain in January, while consumer spending is forecast to be unchanged after leaping 0.9 percent in the warmest January on record. After the bell opens will come reading on consumer confidence, factory orders and the state of manufacturing in the Chicago area.

Oil, which was mixed in early trading Friday, also hit stocks by closing Thursday near a two-month high.

The May light crude futures contract for NYMEX fell 42 cents to $66.73 a barrel in electronic trading, while the May contract for Brent crude rose 14 cents to $66.60.

Major markets in Asia closed mixed Friday, with Japan's Nikkei edging higher and Hong Kong's Hang Seng slipping slightly. Major European markets were down in early trading.

Treasury prices were higher, cutting the yield on the benchmark 10-year note to 4.85 percent from the nearly two-year high of 4.86 percent reached late Thursday. The dollar was higher against the euro and the yen.

Investors will also be watching developments at bankrupt auto parts maker Delphi (Research), which is threatening to ask a bankruptcy court judge to void current labor deals after failing to reach a new deal with the United Auto Workers union. The union has threatened to strike if the contracts are voided, a move that could halt production at Delphi's former parent General Motors (Research). Some analysts fear a prolonged strike could even tip GM to follow Delphi into bankruptcy. Shares of GM were down nearly 3 percent in Frankfurt trading early Friday.

Investors will also be looking for news on a possible sale of the GM finance arm GMAC, which numerous reports say is close to being completed. GM is seeking to sell a majority stake in its most profitable unit in an attempt to return it to an investment grade credit rating and give it easier access to lower-cost capital. But a credit analyst at rating agency Standard & Poor's said Thursday that GMAC might retain its junk bond status if it is sold to a consortium instead of a single credit-worthy financial buyer.

Microsoft (Research) continued its legal battle against 2 million a day fines being proposed by the European Commission, which accuses the software provider of not complied fully with a 2004 European anti-trust decision involving its Windows operating system. Microsoft and its competitors such as IBM (Research) and Oracle (Research) were to set to take the stand at the closed-door hearing on Friday. The Wall Street Journal reported Friday that the U.S. government weighed in on Microsoft's behalf to say it has "substantial concern" about Europe's case. Shares of Microsoft were down slightly in Frankfurt trading Friday.

The Wall Street Journal reported that JP Morgan Chase (Research) is reportedly in discussions to acquire about 300 branches from Bank of New York (Research) in return for a portion of its corporate-trust business. There has been speculation for some time that Bank of New York is interested in pulling out of its retail banking business.