Oracle's unsolicited $5.1 B offer to buy PeopleSoft sends futures zooming, ahead of May jobs report.
June 6, 2003: 7:52 AM EDT
NEW YORK (CNN/Money) - U.S. stocks were set to rally Friday after Oracle made an unsolicited multi-billion-dollar bid for rival PeopleSoft and Intel issued a well-received mid-quarter update, ahead of what is expected to be a weak May jobs report.
At 7:45 a.m. ET, futures pointed to a higher open for the major indexes, which are well positioned to close higher for another winning week unless there's some big-time selling.
Business software maker Oracle (ORCL: Research, Estimates) said it is looking to buy PeopleSoft (PSFT: Research, Estimates) for $5.1 billion in an all-cash deal, which would value the company at approximately $16 a share. Oracle also announced that it will meet or beat current quarter estimates. Oracle shares rose 2 percent in pre-market trade, while PeopleSoft shares rose 15 percent.
The news follows PeopleSoft's recent deal announcement to purchase J.D. Edwards (JDEC: Research, Estimates) earlier this week. Oracle said that if it does merge with PeopleSoft, it will "review" the deal with J.D. Edwards. Shares of J.D. Edwards were the most-actively traded in the pre-market, rising about 2 percent.
Shares of Intel (INTC: Research, Estimates) rose in pre-market trading, pulling up shares of Applied Materials (AMAT: Research, Estimates) and other issues in the semiconductor space. Late Thursday, the No. 1 chipmaker narrowed its sales forecast for the current quarter, although the midpoint remained intact at $6.7 billion. While that doesn't bode ill for the world's No. 1 chipmaker, the lack of upward momentum could make it tough for the bulls to justify the recent runup in the stock.
These developments may prove to be sufficient to boost markets, even if the monthly jobs report turns out to be as weak as expected, with investors mostly willing to dismiss weak economic news lately, on bets that the economy and corporate profits will show solid improvement by the end of the year.
Due out about an hour before the opening bell, economists surveyed by Briefing.com see the unemployment rate climbing to 6.1 percent from 6 percent in April. The number of non-farm jobs is forecast to decline by 30,000 after a 48,000 drop the month before. Both figures would signal lingering weakness in the nation's economy.
In other market moving corporate news, shares of biotech ImClone (IMCLE: Research, Estimates) rallied 25 percent in pre-market trade. The firm said it will resubmit its controversial Erbitux cancer drug for marketing approval after favorable test results announced earlier this week. Additionally, the firm said it would take a smaller-than-expected charge in the current quarter.
Earlier this week, Martha Stewart was indicted for securities fraud due to accusations that she sold shares of ImClone right before Erbitux was denied marketing approval by the Food & Drug Administration a year and a half ago
In the morning's analyst news, Credit Suisse First Boston raised its price target on SBC Communications (SBC: Research, Estimates) to $28 from $25, saying that fundamentals appear to be stabilizing.
Additionally, Credit Suisse First Boston upgraded Tommy Hilfiger (TOM: Research, Estimates) to "neutral" from "underperform" and downgraded Hot Topic to a "neutral" from an "outperform," saying that the stock has gotten too expensive.
Deutsche Bank Securities started coverage of Kohl's (KSS: Research, Estimates) and CostCo (COST: Research, Estimates) with a "sell" rating, saying that the growth story isn't going to survive several years out.
The Dow Jones industrial average begins the session at its highest point in six months after a mere 2-pointadvance Thursday. The Nasdaq composite index is at its highest level in more than a year after gaining 0.7 percent.
To finish higher for the week, the Dow needs to hold on to the 191 points it has advanced so far this week, while the Nasdaq has to avoid losing a little more than 50 points.
European markets rallied at midday, while Asian stocks ended higher, with Tokyo's Nikkei up 1.5 percent to their highest level since January.
Treasury prices rallied in early trading, sending the 10-year note yield down to 3.28 percent from 3.35 percent late Thursday. The dollar edged up against the yen, but slipped versus the euro.
Brent oil futures gained 22 cents to $27.66 a barrel in London, where gold declined in early trading.
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