January 6, 2006

Stock futures point slightly higher; data eyed

By Ellis Mnyandu

NEW YORK (Reuters) - Stock futures pointed to a flat to
slightly firmer open on Wall Street Friday, but caution was
evident ahead of employment data expected to shed more light on
when Federal Reserve interest rate hikes may end.

Economists polled by Reuters expect U.S. payrolls to show a
gain of 200,000 new jobs in December after adding 215,000 new
jobs in November. The unemployment rate is expected to hold
steady at 5.0 percent. The data are due at 8:30 a.m.

Payrolls are among economic indicators followed closely by
the Fed to determine the state of the U.S. economy and the
direction of interest rates.

On Tuesday, minutes from a December 13 Fed policy-setting
meeting suggested rates were near a peak.

But while the minutes featured a statement saying that
"additional firming steps required probably would not be
large," they also said that "future action would depend on the
incoming data."

"The jobs data should tip the scales one way or another,"
said Andre Bakhos, president of Princeton Financial Group in
Princeton, New Jersey.

"As long as the jobs data is construed as benign to the
interest rate picture, the market should continue in its new
year's uptrend. However, if it comes in threatening continued
rate hikes, that could indeed reverse the sanguine outlook that
the market took from the Fed minutes," he added.

Standard & Poor's 500 index futures were up 0.5 points,
above value, a mathematical formula that evaluates pricing by
taking into account interest rates, dividends and time to
expiration on the contract.

Nasdaq 100 index futures were up 0.5 points, and Dow Jones
industrial average futures were up 5 points.

With a reported rating downgrade on Dow component Microsoft
Corp. and a plan by International Business Machines Corp. to
move away from a traditional pension plan to save money, the
technology sector will be in the spotlight.

Credit Suisse First Boston cut its rating on Microsoft to
"neutral" from "outperform," MarketWatch reported on its Web

In other research news tied to the technology sector,
Goldman Sachs raised its 2005 earnings estimate on Internet
search firm Google Inc. to $5.75 a share from $5.68.

The brokerage also raised its 2006 and 2007 profit
estimates for Yahoo Inc., the world's largest Internet media

IBM said after the market close on Thursday that changes to
its U.S. pension plans and changes under consideration in other
countries would save $450 million to $500 million in 2006 and
$2.5 billion to $3 billion in the years 2006 through 2010,
based on year-end 2005 pension assumptions.

On Thursday, the Dow Jones industrial average ended up 2.00
points, or 0.02 percent, at 10,882.15. The Standard & Poor's
500 Index was up 0.02 points at 1,273.48. The technology-laced
Nasdaq Composite Index was up 13.41 points, or 0.59 percent, at

It was the highest close for the Nasdaq since May 2001.