futures rise ahead of service industries data U.S. Stock-Index...

futures rise ahead of service industries data U.S. Stock-Index Futures Rise Ahead of Service-Industries Data

July 6 U.S. stock-index futures gained before the release of a report that may show slowing growth for service industries, giving the Federal Reserve a reason to stop increasing interest rates.

``A slowdown in the service side of the economy would help reduce the need for the Fed to raise rates, because that's where the inflation is,'' said Christian Holland, who helps manage about $1 billion at Cavendish Asset Management in London.

Peabody Energy Corp. rose after offering A$1.83 billion ($1.4 billion) to buy Australia's third-biggest coal-mining company. Wal-Mart Stores Inc., the world's largest retailer, advanced after reporting June same-store sales increased 1.2 percent. Other retailers will issue results for the month today.

Standard & Poor's 500 Index futures expiring in September advanced 1.7 to 1281.50 at 7:59 a.m. in New York. Dow Jones Industrial Average futures gained 16 to 11,230, and Nasdaq-100 Index futures added 2.75 to 1571.

The Nasdaq Composite Index had its biggest decline in three weeks yesterday as U.S. stocks were buffeted by North Korea's launch of test missiles, record oil prices and economic reports that pointed to higher rates.

The Fed said last week that further increases depend on economic data as policy makers boosted their benchmark rate to 5.25 percent, the 17th straight increase.

At the Peak?

``We are approaching a point in about three to four months when the Fed will stop hiking,'' said Per Hansen, an equity strategist at Jyske Bank A/S in Copenhagen. Sentiment is shifting ``to the feeling that we might be very close to the peak.''

Oil reached a record intraday price of $75.40 a barrel yesterday after North Korea test-fired at least seven missiles. Crude oil for August delivery fell as much as 39 cents to $74.80 in New York. Oil's gains may not dissuade investors from buying stocks, Hansen said.

``When you have repeated spikes, people have the tendency to say `We've seen it before, and it didn't do much harm,''' he said.

The Institute for Supply Management's index of non- manufacturing businesses such as banks, builders and retailers is set for release at 10 a.m. New York time.

The index probably fell to 59 in June from 60.1 in May, according to the median forecast in a survey of 67 economists. Readings above 50 show growth. The index includes industries that account for about 90 percent of the economy.

Labor Report

At 8:30 a.m., a report from the Labor Department may show first-time claims for jobless benefits rose to 315,000 last week from 313,000 the previous week, according to economists. Such a reading suggests companies are reluctant to shed workers.

Peabody, the largest U.S. coal producer, added 63 cents to $55.55. Shares of Excel Coal Ltd., which Peabody bid for, traded above the offer as some investors called for a higher price.

Wal-Mart gained 3 cents to $47.05. The company said sales will increase 1 percent to 3 percent this month and kept its forecast for fiscal second-quarter profit of 70 cents to 74 cents a share. June sales rose at the slowest pace since April 2005.

Target Corp., the second-largest U.S. discount chain, may also be active. The International Council of Shopping Centers, which tracks reports from about 75 chains, also releases sales figures for June.

Alcoa Inc. added 37 cents to $33.21. The world's largest aluminum producer reports second-quarter results July 10, becoming the first member of the Dow average to do so.

`Bullish Long Term'

``We are still very bullish on stocks long-term,'' said Robert Morgan, chief investment strategist at Janney Montgomery Scott LLC in Philadelphia. ``They're cheap and they have strong earnings.''

Analysts expect S&P 500 companies to report 12.3 percent profit growth for the second quarter, the 12th consecutive quarter of at least 10 percent, according to Thomson Financial last week. There's been only one streak that long since 1950.

Microchip Technology Inc., which makes semiconductors for products including toasters and automobiles, added 71 cents to $33.12 in Germany. Citigroup Inc. lifted its price estimate for the shares by 7 percent to $46.

General Motors Corp. declined 6 cents to $29.36 in Germany. Executives at the world's largest carmaker are putting together a case against an alliance with Nissan Motor Co. and Renault SA to present at a board meeting tomorrow, the Wall Street Journal reported, citing unidentified people familiar with the matter.

Time Warner Inc. slid 4 cents to $17.09 in Germany. The media company's AOL unit is considering offering its menu of services, including e-mail, free of charge to anyone with a high-speed Internet connection, the Journal reported, citing people familiar with the situation.