Market Set for Pre-Christmas Rally

U.S. futures were up sharply Friday morning, taking the baton from a strong close in Asia and solid intraday gains in Europe. The Nasdaq 100 was up 15.75 points to 2,114.25, the S&P 500 was higher by 11.6 points to 1,486.30 and the Dow gained 74 points to 13,424. European indexes were tracking broadly higher in mid-afternoon trading with gains of 1.3% to 1.4% across the board. Asian indexes were also sharply higher (full story) with the Hang Seng leading all gainers up 2.26%.

Economic reports Friday showed U.S. consumers had a negative personal savings rate for the first time in 15 months in November. Core inflation was up just 0.2% last month, less than the 0.3% expected, but Y/Y core inflation was up 2.2% - outside the Fed’s comfort zone of 1% to 2% inflation. Real disposable incomes fell 0.3% when accounting for inflation (full story).

Merrill Lynch (MER) may receive a capital infusion of as much as $5 billion from Singapore’s Temasek Holdings, according to a report in The Wall Street Journal. With a market capitalization of $46.65B as of Thursday's close, the investment could amount to a more than 10% stake in one of the U.S.’s leading investment banks (full story).

Shares of Circuit City (CC) plunged 31% in pre-market trading, after the company posted a Q3 net loss of $208 million, or $1.26/share, against a net loss of $0.12/share a year ago. Sales were off by 3.1% to $2.96B and comparable store sales fell by 5.6%; analysts were expecting -$0.31/share on sales of $3.0 billion (full story). Walgreen Company (WAG) reported earnings that topped consensus estimates while issuing strong guidance, sending its shares higher by 6.6% in pre-market action (full story).

Vimpel-Communications (VIP) has agreed to acquire Golden Telecom (GLDN), a Russian broadband and fixed-line operator, for around $4.24B, or $105/share, representing a 5% premium over GLDN's Thursday Nasdaq closing price (full story ). Royal Philips Electronics (PHG) announced Friday morning it had agreed to acquire sleep and respiratory disorder device maker Respironics Inc. (RESP) in an all-cash deal worth €3.6 billion ($5.17 billion), a 24% premium to RESP’s closing price Thursday. (full story).

Gold gained $4.10 to $807.30, while Oil was down slightly to $91.01/bbl. 10-year treasuries were lower at 101-15 (yield = 4.07%). At 10:00 AM ET, the Michigan Consumer Sentiment report for December is due out. There are no earnings reports expected today after the closing bell. Monday is Christmas Eve; U.S. markets will close at 1:00 PM ET on December 24 and will not reopen until Wednesday December 26.

Sources: Seeking Alpha
Additional Reading: Wall Street Breakfast ● Asia Ends Week With Strong Gains

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