Wall St. to slip on profit taking, eyes on Bernanke

Thursday, 10 February 2011 01:50 - - {{hitsCtrl.values.hits}}

(Reuters) - U.S. stocks were set to fall at the open on Wednesday as investors took a rise in U.S. interest rates as a cue to take profits a day after the market closed at fresh 2-1/2 year highs.

U.S. 10-year Treasury note yields hit new nine-month highs before a $24 billion auction of notes later on Wednesday.

Investors’ attention turned to Washington where Federal Reserve Chairman Ben Bernanke is scheduled to testify at 10 a.m. (1500 GMT) before a House committee about the economy.

Last week he said the recovery still needs help from the Fed despite signs of improvement.

Coca Cola Co reported sharply higher quarterly earnings that met Wall Street estimates. Shares of the soft drink company rose 1.9 percent to $64.09 before the market’s open.

Blue-chip Walt Disney Co reported after the bell on Tuesday a stronger-than-expected 54 percent surge in profit. Its shares jumped 3.3 percent to $42.54.

“Earnings are fine, the economy continues to show signs of life but we do have this interest rate headwind (and) Treasury yields moving higher that the U.S. equity market can’t continue to ignore,” said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.

S&P 500 futures fell 4 points and were below 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 dipped 8 points and Nasdaq 100 futures lost 7 points. The S&P 500 faces strong resistance in the 1,324-1,333 area, with the upper limit coinciding with a 100 percent advance from the lows hit in March 2009. Short-term technical support for the benchmark kicks in at 1,313.

Weighing on financial shares, Wells Fargo & Co dropped 2.9 percent to $33.12 on news the bank’s chief financial officer will retire.

Ingersoll-Rand Plc fell 5.2 percent to $46.46 after the maker of cooling systems reported weaker-than-expected quarterly earnings.

American International Group Inc shares fell 1 percent to $41.95 after the bailed-out insurer said it will take a $4.1 billion fourth-quarter charge at one of its units.

The London Stock Exchange is to buy the Toronto Stock Exchange operator TMX in an all-share deal to create a major center for trading in mining shares if likely political opposition in Canada can be overcome. On Tuesday U.S. stocks hit fresh multiyear highs after strong sales by McDonald’s boosted optimism on consumer spending.