Stocks point to plus open after big gain By MADLEN READ, AP Business Writer

Stocks point to plus open after big gain By MADLEN READ, AP Business Writer
18 minutes ago



NEW YORK - U.S. stock futures pointed toward a higher opening Wednesday as Wall Street looked to extend its rally a day after a half-point rate cut from the Federal Reserve.

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Stocks soared Tuesday after the Fed slashed the target federal funds rate to 4.75 percent from 5.25 percent because of signs that credit market problems could hurt the overall economy. The Dow Jones industrials, climbing nearly 336 points, had their biggest one-day point gain in nearly five years.

Wednesday brings new economic data, which investors will be parsing to determine how the economy is faring amid the current credit climate and volatile stock market.

The Labor Department's August consumer price index is scheduled to come out at 8:30 a.m. EDT. According to a Thomson Financial survey, economists on average are anticipating a 0.1 percent decline in the headline CPI, and a 0.2 percent uptick in the core CPI, which eliminates food and energy prices.

At the same time, the Commerce Department reports on new home construction. The data is anticipated to show that construction of new homes and apartments in August fell to an annual rate of 1.339 million units, down 3 percent from an annual rate of 1.381 million units in July.

But in advance of the data, which of course reflects activity well before Tuesday's rate cut, investors appeared to hold on to their renewed optimism — even after Morgan Stanley, the second-largest U.S. investment bank, posted a 17 percent drop in third-quarter profit. The decline was steeper than analysts predicted.

Dow Jones industrial average futures expiring in December rose 45, or 0.32 percent, to 13,880. S&P 500 index futures rose 5.80, or 0.38 percent, to 1,538.90, and Nasdaq 100 Index futures rose 3.50, or 0.17 percent, to 2,062.75.

In August, commodity prices fell along with stocks as investors drew their cash out of riskier assets and put it into safer government securities. However, crude oil prices are back at record highs above $81 a barrel. In premarket trading on the New York Mercantile Exchange, crude rose another 48 cents to $81.99 a barrel.

Gold prices also extended strong gains made Tuesday.

And in a trend that's likely to exacerbate the effects of high commodity prices on U.S. consumers, the dollar slumped to a new low against the euro Wednesday. The euro rose as high as $1.3987 in morning European trading before settling back to $1.3981, still above the $1.3971 it bought in late New York trading Tuesday.

European and Asian stocks surged following the Fed's rate cut.

Britain's FTSE 100 rose 2.26 percent, Germany's DAX index rose 1.81 percent, and France's CAC-40 rose 2.43 percent.

Japan's Nikkei index rose 3.67 percent and Hong Kong's Hang Seng Index rose 3.98 percent.

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