January 21, 2009 / 12:40 AM / 11 years ago

Wall Street set for higher open, boosted by IBM

NEW YORK (Reuters) - Wall Street was poised for a higher open on Wednesday, buoyed by a solid outlook from IBM, while investors were looking for measures from President Barack Obama to keep the year-long recession from worsening.

Trading takes place at the Merrill Lynch trading station as trading closes on the final day of the year at the New York Stock Exchange in New York, December 31, 2008. REUTERS/Ray Stubblebine

Dow component International Business Machines Corp (IBM.N) could provide a boost after the world’s top technology services firm posted quarterly profit and a 2009 profit outlook that surpassed expectations.

Shares of IBM were up 4.2 percent at $85.45 in premarket trading.

“IBM’s guidance painted a rosy picture which the market’s going to hang their hat on today,” said Andre Bakhos, president of Princeton Financial Group in Princeton in New Jersey.

“With the inaugural pomp and circumstance being over, President Obama will be rolling up his sleeves to work on bank rescue plans and there is a little optimism that under the new administration, something magical can come out.”

The U.S. stock market had ushered in the Obama presidency with a record Inauguration Day drop on Tuesday amid fresh signs the global bank crisis was far from over. Now investors were watching for maneuvers from the new president, who has vowed bold and swift action to deal with the economic downturn.

Obama will meet with his economic advisors, who are working with the Democratic-led Congress on an $825 billion fiscal stimulus package.

S&P 500 futures were up 6.10 points and 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 were up 48 points, and Nasdaq 100 futures were up 3.25 points.

Tuesday’s decline for the Dow marked the largest point and percentage drop for the index since December 1, 2008, and the first time the Dow has been below 8,000 since November 20, 2008.

Although the broad S&P 500 has rebounded from its November 21 intraday low, the broad index has fallen 10.9 percent this year on worries about the deepening global recession.

Investors will also be watching a hearing by the Senate Finance Committee on the nomination of Timothy Geithner to be Treasury secretary.

Wall Street had initially cheered Obama’s choice of Geithner but the nomination has since come under controversy and Geithner is expected to face questions about his past failure to pay some taxes.

Among the morning’s round of earnings results, diversified manufacturer United Technologies Corp (UTX.N) posted a rise in profit as revenue from maintenance of its products offset slowing orders for new equipment.

The Financial Select Sector SPDR (XLF.P) rose, snapping a five-day losing streak the day after a sell-off in banks led the markets lower. JPMorgan Chase (JPM.N) was up 2.9 percent at $18.60 before the opening bell, while Bank of America (BAC.N) rose 3.7 percent to $5.29.

However, Bakhos noted that the sector remains plagued by fears of further losses at banks and the possibility they will have to raise more capital.

Analysts also said expectations for the earnings season overall remain low.

But the tech sector saw another bright spot when Ericsson (ERICb.ST), the world’s top mobile telecom equipment maker, posted better-than-expected earnings, although the company promised deeper savings, including 5,000 job cuts.

Wall Street will get a further look at how the tech sector is faring when iPod and iPhone maker Apple Inc (AAPL.O) reports quarterly results after the bell.

Editing by Chizu Nomiyama

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