Wall Street Looking For Answers To Lehman Question; Futures Narrowly Mixed

(RTTNews) - US stocks were looking for direction Friday morning in New York amid speculation that Lehman Brothers may find an American buyer. Investors remain cautions that the embattled lender can find a white knight leaving stock futures little changed as of 6 am ET.

Stocks ended Thursday’s session with notable gains, as a drop in oil prices prompted investors to go bargain hunting. Rumors about an acquisition of Lehman Brothers fueled a late day rally.

Lehman Brothers Holdings Inc. (LEH) is in active merger talks with potential buyers, media reports said Thursday.
Bank of America Corp. (BAC) is among the potential buyers, the Wall Street Journal reported, citing unidentified people.

The Washington Post reported on its Web site late Thursday that the U.S. Federal Reserve and U.S. Treasury Department were engineering a sale of Lehman to a group of firms.

Meanwhile, Washington Mutual (WM) attempted to ease anxieties about its outlook, saying it “”continues to be confident that it has sufficient liquidity and capital to support its operations while it returns to profitability.”

On the economic front, the Department of Labor will release its producer price index, which is a key inflation indicator at the wholesale level. After seeing a 1.2 percent increase in July, economists expect the producer price index to decrease slightly.

“We look for the August Producer Price Index (PPI) to decline by 0.3 percent, the first negative reading since December 2007,” say the analysts at Lehman Brothers. “Excluding the volatile food and energy components, we expect the core PPI to rise 0.3 percent or 3.8 percent y-o-y.”

The markets may also be influenced by the Department of Commerce’s retail sales report and its business inventories report. Additionally, the University of Michigan will release the results of its consumer sentiment survey.

The price of oil was up a bit in electronic dealing Friday morning after testing the $100 mark yesterday. Crude for October was up $1.13 at $102 a barrel.

Asian stocks were mixed on Friday, with the Hang Seng of Hong Kong slipping 36 points, while Tokyo’s Nikkei rose 112 points.

In European intraday dealing, the FTSE of the UK was up 56 points, the DAX of Germany was up 47 points, and the CAC of France was up 54 points.

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