Stock futures point to higher open despite weak GDP data

By IBTimes Staff Reporter | December 22 2009 9:08 AM

Stock index futures eased from earlier highs but still pointed to a higher open on Tuesday after data showed the economy grew in the third quarter, but at a much slower pace than first thought.

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The Commerce Department's final estimate showed gross domestic product grew at a 2.2 percent annual rate, instead of the 2.8 percent pace reported last month. Analysts expected a reading of 2.8 percent.

The number is not quite as strong as expected, but it's close enough to hold us here, said Frank Lesh, futures analyst at FuturePath Trading LLC in Chicago. I didn't see anything horrible in there that would take us down.

S&P 500 futures rose 3.3 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 27 points, and Nasdaq 100 futures added 8 points.

Additional data on tap for Tuesday includes November existing home sales and the December Richmond Fed survey set for release at 10 a.m. EST. Existing home sales are expected to post their third straight monthly increase in the month, in a potential signal the troubled housing market is stabilizing.

Ford Motor Co rose 1.1 percent to $9.78 in premarket trading a day after it said it was offering buyouts and early retirement to all of its 41,000 U.S. factory workers in a move to cut its payroll costs.

February crude futures slid 0.5 percent to $73.35 per barrel after OPEC agreed to leave its production targets unchanged, and ahead of the release of U.S. inventory data, which is expected to show a fall in stockpiles. The U.S. dollar index <.DXY> was little changed.

The proposed merger Live Nation Inc and Ticketmaster Inc was given a boost after a British regulatory body dropped objections and approved the deal.

U.S. stocks rallied in Monday's session, with the Nasdaq hitting a 15-month high after brokerages upgraded two Dow components on improved profit prospects. Healthcare stocks advanced after a bill to overhaul the U.S. healthcare system passed a crucial test in the U.S. Senate. The measure is perceived as less damaging to industry profits than expected.

(Additional reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)