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US STOCKS-Wall St to rise as Chinese manufacturing grows

Published 10/01/2010, 09:28 AM
Updated 10/01/2010, 09:32 AM
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* Chinese manufacturing picks up, boosts commodities

* Bad weather disrupts transport in New York City

* U.S. manufacturing expected to resume slowing path

* Futures up: Dow 58 pts, S&P 7 pts, Nasdaq 15 pts (Updates market activity)

By Edward Krudy

NEW YORK, Oct 1 (Reuters) - Wall Street was set to rise on Friday as a pick up in Chinese manufacturing eased concerns about the state of the global economy, and investors now focusing on U.S. manufacturing data later in the day.

Chinese manufacturing picked up steam in September after a mid-year lull, allaying fears of a slowdown in the world's second largest economy. Other global manufacturing data showed that although growth slowed in other parts of Asia and the euro zone, business activity stayed healthy.

In what could be a boon for resource-related stocks, the Chinese data bolstered oil and metal prices. Copper rallied to its highest in more than two years, while oil traded at around a seven-month high, over $81 a barrel.

In premarket trading, shares in Freeport McMoRan Copper and Gold Inc rose 1.7 percent to $86.83 and ConocoPhillips rose 0.8 percent to $57.90.

The Chinese data comes ahead of a report expected to show U.S. manufacturing resumed its slowing path last month, indicating a decoupling between emerging and developed economies.

"The ISM number will be the real driver for trading," said Paul Nolte, managing director at Dearborn Partners in Chicago. "I'm expecting it to tick down a little, but remain above 50, so still expanding."

Last month the Institute for Supply Management index came in much better than expected, helping to spark the September rally.

S&P 500 futures rose 7 points and were below 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 added 58 points, and Nasdaq 100 futures rose 15 points.

The ISM manufacturing index at 10 a.m. (1400 GMT) is expected to show a reading of 54.5 versus 56.3 in August, according to a Reuters poll.

Adding to recent expectation the Federal Reserve will move to stimulate the economy, William Dudley, president of the Federal Reserve Bank of New York said action to boost growth will likely be warranted unless the economic outlook improves.

In corporate news, shares in Hewlett-Packard fell about 2 percent to $41.24 in premarket trade, resuming a slide after the market closed on Thursday, after the company named former SAP Chief Executive Leo Apotheker as its new CEO and president.

Bank of America-Merrill Lynch on Friday downgraded Caterpillar Inc to "neutral" from "buy," saying that after a recent run-up in the shares, it saw limited upside. Caterpillar's shares fell 0.6 percent to $78.20.

Wells Fargo cut its earnings estimates on several big U.S. banks on lower trading revenues. Banks included in the earnings downgrade included Goldman Sachs, Bank of America, Morgan Stanley and JPMorgan.

Public transport services in and around the New York City were reporting delays and stoppages due to heavy rainfall.

"We're fully staffed here, there are probably pockets of people who have lost people and who can't get in," said Jason Weisberg, director of institutional trading at Seaport Securities in New York. "These days, with technology, people can work around it or plan ahead."

(Additional reporting by Ryan Vlastelica) (Reporting by Edward Krudy; Editing by Theodore d'Afflisio)

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