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Wall Street set for higher open

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[October 09, 2008]  NEW YORK (AP) -- Wall Street appeared headed for a strong open Thursday after IBM Corp. reaffirmed its profit outlook and investors hoped that the selling that cascaded through global markets a day earlier was overdone.

Stock markets around the world moved mostly higher one day after the Federal Reserve and other leading central banks cut interest rates to help fight the credit crisis and stimulate the global economy.

Auto RepairAsian were steady to higher and European markets rose. Dow Jones industrial average futures were up 178 points ahead of the opening bell in New York.

There was hope by investors that perhaps Wall Street is getting closer to finding a bottom after the worst five-day rout since 1987. On Wednesday, the Dow gave up 189 points to close at 9,258.10 -- and is now down about 35 percent from its high of 14,164.53 reached exactly one year ago.

While rate cuts can take up to a year to work its way through the economy, there was some positive signs Thursday that corporate earnings might come in better than expected. IBM, a Dow component, posted third-quarter results that beat forecasts and reaffirmed its full-year earnings guidance.

There might also be a bit more hope in the market on a report that the Bush administration is mulling a plan to stabilize hobbled U.S. banks. The government is considering taking ownership stakes in certain U.S. banks as an option for dealing with a severe global credit crisis.


Britain rolled out a similar plan, though no U.K. bank has received any investments. In Iceland, the government now has control of three of the country's major banks as it struggles to contain the panic.

Late Wednesday, the U.S. government has already come to the rescue of American International Group Inc. The Fed said late Wednesday that it will lend $37.8 billion to the insurer, which is on top of an $85 billion loan AIG received last month.

Stock futures held an uneasy advance on Thursday, though early signs that the market will move higher has often been erased with trading extremely volatile during the past few weeks. Two hours ahead of the open, Dow futures rose 178, or 1.89 percent, to 9,379. Standard & Poor's 500 composite futures added 13.50, or 1.38 percent, to 994.90, and Nasdaq-100 futures added 29.25, or 2.22 percent, to 1,349.25.

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In Asia, the Nikkei 225 closed down 0.50 percent while the Hang Seng added 3.31 percent. European bourses advanced, with Britain's FTSE-100 up 1.41 percent, Germany's DAX up 0.55 percent, and France's CAC-40 up 2.49 percent.

Investors will also be watching to see what kind of an effect short selling will have on the market now that a three-week ban imposed by regulators has expired. Some analysts believe the unprecedented ban on short selling -- an effort to bolster investor confidence amid the worst financial crisis since the stock market crash of 1929 -- did more harm than good at a time of historic market volatility.

Reports on weekly jobless claims and August wholesale inventories also could have an effect on trading during the session.

Meanwhile, oil prices looked for direction as traders weighed fears that a world recession will crimp demand against speculation that OPEC may cut output to keep prices from falling too far. Light, sweet crude for November delivery was up by 28 cents at $89.23 a barrel in electronic trading on the New York Mercantile Exchange.

[Associated Press; By JOE BEL BRUNO]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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