US STOCKS-Wall St set to rise at open as rosy GDP boosts confidence

Fri Dec 20, 2013 9:21am EST

* Red Hat gains after earnings, outlook

* Blackberry tumbles after results

* Final GDP reading tops expectations

* Futures up: Dow 20 pts, S&P 3.4 pts, Nasdaq 8.75 pts

By Chuck Mikolajczak

NEW YORK, Dec 20 (Reuters) - U.S. stocks were set to open higher Friday, putting the S&P 500 on track for its biggest weekly climb in two months, as rosy U.S. growth data likely boosts investor confidence that the economy can support a wind-down of Federal Reserve stimulus.

Gross domestic product grew at a 4.1 percent annual rate in the third quarter, the fastest pace in almost two years, and higher than the 3.6 percent pace reported earlier this month. Business spending was also stronger than previously estimated.

"Maybe it's not going to impact the fourth quarter (GDP) but it can certainly lift 2014. The consensus is moving that way, we are looking towards improved economic strength as we move into 2014," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

"The change is the fact equities are up on this news, maybe even just a month ago they would have been down on this news with the feeling this means the Fed is going to tighten or taper aggressively."

On Wednesday, the central bank modestly trimmed the pace of its market-friendly monthly asset purchases, by $10 billion to $75 billion, and suggested its key interest rate would stay at rock bottom longer than previously promised.

The S&P 500 has gained nearly 27 percent this year and is on track for its biggest yearly gain since 1997, largely fueled by the Fed's stimulus aimed at boosting the economy.

Fed Chairman Ben Bernanke said if U.S. job gains continue as expected, the bond purchases would likely continue to be cut at a "measured" pace through much of next year and would probably be wound down "late in the year, certainly not by the middle of the year."

S&P 500 futures rose 3.4 points and were modestly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 20 points and Nasdaq 100 futures added 8.75 points.

Red Hat Inc jumped 13.9 percent to $55.80 in premarket trading after the world's largest commercial distributor of the Linux operating system reported third-quarter results above analysts' estimates and raised its full-year forecast.

Blackberry Ltd reported a massive quarterly loss on Friday due to an inventory writedown and asset impairment charges. Shares reversed course after initial losses in premarket trading and were up 2.6 percent to $6.41 after comments from the CEO.

Walgreen Co shed 2.1 percent to $55.75 in premarket trading after the largest U.S. drugstore operator reported higher first-quarter sales but said an increase in promotions and a slowdown in the introduction of higher-profit generic drugs cut into the gross profit margin.

Jones Group Inc climbed 5 percent to $14.83 after the company said on Thursday it had agreed to be bought by Sycamore Partners for $15 per share, or $1.2 billion.

Carnival Corp gained 3.6 percent to $39.40 before the opening bell after Credit Suisse boosted its rating on the stock to "outperform" from "neutral."

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