U.S. MARKET AVERAGES
U.S. stock futures were sitting slightly below the flat line, predicting weaker opening on rising oil prices and brokerage downgrades of Dow industrials components Coca-Cola and J.P. Morgan Chase. On Wednesday stock markets posted modest gains on continued positive sentiment on Wall Street, despite an earnings warning from chemicals company DuPont with the Nasdaq building on gains for the seventh straight session.
Front-month crude traded at $64.66 a barrel, reflecting supply concerns as tension over Iran’s nuclear ambitions escalated.
Goldman Sachs downgraded
The Coca-Cola Co. to in-line from outperform and cut
Anheuser-Busch Cos. to underperform from in-line.
Dow component
J.P. Morgan Chase was downgraded to market perform from outperform by Piper Jaffray, as the broker believes healthy capital markets and synergies from its merger with Bank One are fully figured into the shares.
AT&T Corp was upgraded by Prudential Equity Group to overweight from neutral weight, citing increased SBC and AT&T merger synergies, aggressive share buybacks, and a lowered cost structure.
On corporate news front,
Guidant (
GDT: chart) revealed that it reached a new deal to be acquired by
Johnson & Johnson (
JNJ: chart) as it offered a higher value of $23.2 billion, an increase compared to J&J's previous bid, but still below the $25 billion offered by
Boston Scientific (
BSX: chart).
In economic news, the Commerce Department reported that the trade deficit declined by 5.7% in November to $64.2 billion after hitting a record of $68.1 billion in October.
In other economic news, the Labor Department reported that the number of initial jobless claims rose by 17,000 last week to total 309,000. Economists had been expecting an increase of 24,000. The figures indicate continued strength in the labor market.
S&P 500 futures dipped 1.3 points at 1,298.40 and Nasdaq 100 futures were off 1.5 points at 1,769.50.
ECONOMIC NEWS
Before the start of trading on Thursday, the Department of Commerce released its report on the U.S. trade deficit in the month of November. The report showed that the trade deficit narrowed more than economists had expected.
The Commerce Dept. said that the trade deficit narrowed to $64.2 billion in November from a revised $68.1 billion in October. Economists had expected the deficit to come in at $66.0 billion compared to the deficit of $68.9 billion originally reported for October.
The narrower trade deficit came as the value of exports rose while the value of imports fell. The report showed that exports rose 1.8 percent to $109.3 billion in November, while imports fell 1.1 percent to $173.5 billion.
The increase in the value of exports reflected a rise in exports of goods, particularly capital goods, consumer goods, and industrial supplies and materials. At the same time, imports of goods fell, reflecting decreases in imports of industrial supplies and materials and consumer goods.
Despite the decrease in November, the trade surplus for the first 11 months of 2005 came in at $661.8 billion compared to the annual record of $617.6 billion in 2004. Economists expect that the annual deficit for 2005 will top $700 billion.
INTERNATIONAL MARKETS NEWS
Asian-Pacific benchmarks rallied on strong technology shares, lifted by analyst upgrades and corporate news. China’s Shanghai Composite was the outstanding leader among gainers, surging 1.3% to 1,226.704. The Nikkei hit a new five-year high of 0.5% to 16,445.19, followed by South Korea’s Kospi, up 0.6%, and Hong Kong’s Hang Seng rising for the eighth consecutive session with a gain of 0.4%.
European stocks were mostly lower at mid-day trading on weak telecom stocks, hurt by warning from France Telecom of worse-than-expected sales growth in 2006. the German DAX 30 fell 0.1%, the CAC 40 slipped 0.2%, while London’s FTSE 100 gained 0.1% on oil stocks, rising on the back of higher crude oil.
OIL, METALS, CURRENCIES 
