The Commerce Department is expected to report that construction of new single-family homes and apartments declined in April by about 0.7 percent to an annual rate of 940,000 units, according to the median estimate of economists polled by Thomson/IFR. Building permits, a harbinger of future activity, are anticipated to fall as well.
The stock market has seen a litany of dismal readings on the housing market for several months now, so poor results do not come as a surprise. However, with Wall Street hoping for an economic rebound in the second half of 2008, many investors are searching for signs that the housing market, while weak, is perhaps bottoming out.
Dow Jones industrial average futures rose 15, or 0.10 percent, to 13,011.
Standard & Poor's 500 index futures rose 1.40, or 0.10 percent, to 1,426.00, and the Nasdaq 100 futures rose 2.25, or 0.11 percent, to 2,038.00.
The stock market rose Thursday for the second day in a row, driving the S&P 500 and Nasdaq to five-month highs, as oil prices reversed gains to trade lower and as data on jobless claims and Philadelphia-area manufacturing came in better than expected.
But energy-related worries could arise again on Friday.
Light, sweet crude oil surged more than $3 to $127.43 a barrel — a new trading high — in premarket electronic trading on the New York Mercantile Exchange.
Investors have been tracking energy prices closely, with the average U.S. retail price of gasoline around $3.77 per gallon and the average price of diesel fuel near $4.46 a gallon. Consumers and businesses alike are struggling with high commodities costs, although readings on overall inflation have been mild, so Wall Street remains concerned about spending on discretionary items.
Late Thursday, Kohl's Corp. and Nordstrom Inc. — two large U.S. department store chains — both reported sharp declines in profits for the first quarter, but their results were better than analysts had forecast. Kohl's and Nordstrom shares rose in after-hours trading Thursday.
In other economic data expected Friday, the University of Michigan at 10 a.m. EDT releases its preliminary reading on May consumer sentiment. Economists forecast a marginal decline from April.
Goverment bond prices slipped ahead of the market's open. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.84 percent from 3.82 percent late Thursday.
Gold prices rose, while the dollar fell against other major currencies.
Overseas, Japan's Nikkei stock average rose 0.39 percent. In afternoon trading, Britain's FTSE 100 rose 1.35 percent, Germany's DAX index rose 1.36 percent, and France's CAC-40 rose 0.86 percent.
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Sumitomo Mitsui Financial Group (8316.T)
reported a threefold increase in fourth-quarter profit,
rebounding from massive losses at its consumer finance unit a
year earlier, and it forecast modest growth ahead.
Sumitomo Mitsui said investments related to risky subprime
investments cost it 93 billion yen ($889 million) in the year
to March, and estimated its subprime exposure had been whittled
down to just 5.5 billion yen.
That's only a sliver of the 645 billion yen that rival
Mizuho Financial Group (8411.T) lost on subprime-related
But while SMFG has little subprime exposure, it has taken
greater hits from its ties to the consumer finance industry,
where stricter regulations have dented profits.
Faced with a weak domestic economy, it has seen sluggish
lending growth and been forced to raise provisions against bad
loans. The market downturn has also sparked losses on its stock
January-March group net profit was 142.05 billion yen,
according to Reuters calculations, versus 45.3 billion yen a
Rather than strong growth, the results represent a rebound
from the previous year, when earnings were sliced by massive
losses at money lending affiliate Promise Co (8574.T).
Reuters calculated the quarterly figures from SMFG's
full-year and nine-month earnings statements filed with the
Tokyo Stock Exchange.
A poll of seven analysts by Reuters Estimates had implied
an average estimate for a 137 billion yen net profit for the
January-March fiscal fourth quarter.
For the year ended March 31, group net profit totaled
461.54 billion yen. The results were largely expected after the
bank cut its estimate to 460 billion yen last month to reflect
stock losses and higher bad loan provisions.
For the year to March 2009, SMFG forecast a profit of 480
billion yen, well below the market consensus of 547.8 billion
Tokyo banks have also been hurt by slow lending in the
world's second-largest economy. Many Japanese corporates now
shun loans after recovering from a 1990s asset bubble and
cleaning up their balance sheets.
Data released this week by the Bank of Japan showed lending
in April grew at its fastest pace in a year, but even that was
just a lean 1.2 percent, and some economists doubt demand will
Analysts are also watching a recent spike in bankruptcies,
a sign that banks will need to continue raising provisions for
SMFG shares lost 22 percent in January-March quarter,
underperforming a 19 percent drop in Tokyo's banking index
The stock closed up 1.4 percent at 876,000 yen before the
earnings were released on Friday, compared with a 0.7 percent
gain in the bank index.
(Reporting by David Dolan; Editing by Ian Geoghegan and
Berkshire Hathaway Inc (BRKa.N),
billionaire Warren Buffett's investment company, no longer held
any Ameriprise Financial Inc (AMP.N) stock as of March 31,
according to a U.S. regulatory filing on Thursday.
Berkshire previously owned 661,742 Ameriprise shares,
according to a filing with the U.S. Securities and Exchange
Berkshire increased stakes in the following at the end of
the first quarter: Burlington Northern Santa Fe Corp (BNI.N);
Ingersoll-Rand Co Ltd (IR.N); Kraft Foods Inc (KFT.N); U.S.
Bancorp (USB.N); Wells Fargo & Co (WFC.N) and WellPoint Inc
It lowered its holdings slightly in Iron Mountain Inc
(IRM.N), according to a quarterly report.
(Reporting by John Poirier; editing by Jeffrey Benkoe)