Wednesday May 7, 11:03 AM
WALL STREET OUTLOOK Lower open seen on rate concerns; Cisco, Disney in focus
LONDON (Thomson Financial) - Wall Street is looking at a slightly lower open Wednesday after a Federal Reserve official said the central bank might need to raise interest rates to curb inflation, but Cisco Systems (NASDAQ: CSCO - news) and Walt Disney are likely to buck the downtrend following solid quarterly results.
According to spread bettors IG Index, the Dow Jones Industrial Average is expected to open down about 10 points at 13,011. Separately, S&P 500 futures were off 3 points at 1,417.70 while Nasdaq 100 (NASDAQ: news) futures dropped 6.50 points to 1,992.50.
On Tuesday, stocks ended higher as concern over the negative impact on the economy of record oil prices was offset by optimism sparked by better-than-expected quarterly results from companies outside the battered financial and housing sectors.
Highlighting this trend, shares in Cisco Systems rose in after-hours trading Tuesday following better-than-expected quarterly results and in-line sales guidance, although some analysts expressed concern on slowing revenue growth across many of its geographical regions and product lines.
Walt Disney Co. shares climbed 2.9% in after-hours trading Tuesday after the media company posted second-quarter profit and revenue that topped analyst expectations.
But worry over the possibility of higher interest rates was dampening sentiment.
Overnight, Thomas Hoenig, president of the Federal Reserve Bank of Kansas City said that the Fed might need to raise interest rates to curb inflationary pressures building up in the U.S. economy.
Investors may also receive some bad news on the housing front, with the pending home sales index for March expected to fall to 83.8 from 84.6 in the prior month, according to economists polled by Thomson Reuters (TRI.TO - news) ' IFR Markets.
Preliminary data on productivity and unit labor costs for the first quarter are also scheduled for release.
Crude futures edged higher to trade just under $122 a barrel as supply concerns continued to underpin prices even as a weekly U.S. supply report is expected to show a rise in crude inventories.
Gasoline stockpiles, however, are expected to have dropped by 200,000 barrels ahead of the peak demand driving season.
New York light sweet crude was up 8 cents at $121.92 a barrel.
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