Stocks head for higher open on Rohm & Haas deal

[July 10, 2008]  NEW YORK (AP) -- U.S. stock futures turned higher Thursday after Wal-Mart Stores Inc. reported stronger-than-expected sales for June and Dow Chemical Co. said it would acquire rival specialty chemicals maker Rohm and Haas Co. in a deal worth more than $15 billion.

Wal-Mart said it got a boost from the government's stimulus package, and it raised its outlook for the current quarter.

Meanwhile, Dow Chemical said it will acquire Rohm & Haas for $78 per share, a 74 percent premium to the stock's close of $44.83 Thursday. Based on the roughly 196 million shares Rohm and Haas had outstanding as of April 22, the deal would be worth about $15.29 billion. Dow values the planned transaction at $18.8 billion including debt.

Wal-Mart's report and the dealmaking injected Wall Street with some welcome optimism following several volatile sessions. Buyout activity is often regarded as a sign of confidence in the marketplace and the economy.

Stocks tumbled Wednesday amid concerns about the financial sector, leaving the major indexes in bear market territory -- down more than 20 percent from their October highs.

Stock futures were already moderately higher before Wal-Mart's report and the Rohm and Haas deal's announcement, as investors awaited a weekly government report on unemployment claims and more reports from retailers on June sales.

A Labor Department report due before the opening bell is expected to show the number of workers seeking unemployment benefits fell last week, after rising in the prior period to the highest level since late March. Wall Street economists surveyed by Thomson/IFR forecast that new claims will have dropped to 399,000.

Beyond Wal-Mart, other retailers' monthly reports on same-store sales could show the degree to which companies benefited from the government's stimulus checks. A hesitant consumer is a concern for Wall Street, as consumer spending accounts for more than two-thirds of U.S. economic activity.

A day after the Dow Jones industrial average fell more than 230 points, Dow futures rose 79 points, or 0.71 percent, to 11,228. Standard & Poor's 500 index futures rose 7.30, or 0.58 percent, to 1,255.30, while Nasdaq 100 index futures advanced 10.75, or 0.59 percent, to 1,842.25.

Bond prices fell as investors retreated from the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.85 percent from 3.82 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose 65 cents to $136.70 per barrel in premarket electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average rose 0.12 percent. In afternoon trading, Britain's FTSE 100 fell 1.69 percent, Germany's DAX index declined 1.00 percent, and France's CAC-40 fell 1.64 percent.

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[Associated Press; By TIM PARADIS]

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