Stocks set to open the week with moderate gains

[August 23, 2010]  NEW YORK (AP) -- Stock futures rose modestly Monday as investors tentatively move back into the market after a recent retreat because of worries about the economy.

There are no major economic reports due out Monday that could sway trading. So while investors are set to buy stocks, they are buying Treasury bonds as well. That has sent interest rates slightly lower.

European markets rose, which could be providing a lift to U.S. markets. They are getting a lift from a fresh round of merger and acquisition activity. HSBC Holdings PLC is in talks to buy a controlling stake in Nedbank Group Ltd. of South Africa from Old Mutual PLC for as much as $6.8 billion. Potash Corp. of Saskatchewan Inc. formally rejected BHP Billiton's offer to acquire the fertilizer company.

Potential acquisitions are a sign companies are confident the economy will grow and business will improve in the coming quarters.

U.S. economic reports later this week will be closely watched to see if they can break a run of disappointing numbers. Many reports recently have shown growth in the domestic economy is slowing. That has reignited worries that the U.S. economy could fall back into a recession and curb a global recovery.

Last Thursday's report on weekly claims for unemployment benefits was particularly troubling because claims jumped to their highest level since November. That sparked a two-day sell-off in stocks to end the week.

High unemployment remains the biggest obstacle to a stronger recovery. Analysts widely believe, though, that high unemployment will remain for a while because companies are still tentative about economic growth and unsure about potential increases in taxes and costs from health care reform passed earlier this year.

Ahead of the opening bell, Dow Jones industrial average futures rose 44, or 0.4 percent, to 10,246. Standard & Poor's 500 index futures rose 6.10, or 0.6 percent, to 1,076.40, while Nasdaq 100 index futures rose 12.50, or 0.7 percent, to 1,838.00.

Bond prices rose slightly. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.61 percent from 2.62 percent late Friday. Its yield is often used to set interest rates on mortgages and consumer loans.

Investors will get data on the housing market, durable goods orders, consumer sentiment and a revision to the second-quarter gross domestic product later this week.

The housing market remains weak, particularly after the expiration of the government's tax credit earlier this year. Reports on existing and new home sales are due out Tuesday and Wednesday respectively.

Wednesday's durable goods order will be eyed for signs that a slowdown in manufacturing was only temporary. A regional manufacturing report Thursday about the Mid-Atlantic region showed activity shrank, spooking investors. Manufacturing had shown the most consistent growth throughout the year.

On Friday, investors will get a revision to the GDP estimate, which is the broadest measure of the nation's economic output. With recent data showing a further slowdown, second-quarter growth was likely not as strong as first thought.

The University of Michigan also reports its second reading on consumer sentiment for the month.

Potash shares rose $1.33 to $151.00 in pre-opening trading. HSBC shares trading in the U.S. rose 50 cents to $49.80.

Overseas, Britain's FTSE 100 rose 0.7 percent, Germany's DAX index climbed 0.4 percent, and France's CAC-40 rose 0.9 percent. Japan's Nikkei stock average fell 0.7 percent.

[Associated Press; By STEPHEN BERNARD]

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