* Futures rise amid credit market thaw
* Reassuring data offsets mixed earnings reports
* Investors seen bargain-hunting after Wednesday's slide
* Merrill posts worse-than-expected loss
(Recasts first paragraph, updates prices)
By Ellis Mnyandu
NEW YORK, Oct 16 (Reuters) - U.S. stocks headed for a
higher open on Thursday as signs of further thawing in the
credit markets and reassuring economic reports offset a spate
of mixed earnings reports.
A day after Wall Street suffered its worst slide in more
than two decades, the cost for banks to borrow from among each
other slipped, indicating that efforts to loosen up credit may
be working in the important short-term market. For details, see
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Government data showed the number of people filing new
claims for jobless benefits slid more than expected last week
and core consumer prices, which exclude volatile food and
energy costs, rose less than expected in September, raising
hopes of another interest rate cut.
"The reason the market rallies a little is because the
overnight (interbank lending rates) came in a little, which is
positive," said Dave Rovelli, managing director of U.S. equity
trading at Canaccord Adams in New York.
He added, however, that the lending rates still had to come
down a lot more.
S&P 500 futures <SPc1> rose 24.50 points and were above
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 <DJc1> gained
219 points, and Nasdaq 100 <NDc1> futures climbed 34.25
points.
Investors looked to scour the market for beaten down
shares, a day after recession fears sent Wall Street to its
biggest tumble since the October, 1987 stock market crash.
In earnings news, Merrill Lynch <MER.N> , which is being
bought by Bank of America <BAC.N> , posted a
steeper-than-expected $7.5 billion third-quarter loss. Its
shares rose slightly after falling 4 percent to $17.51 before
the bell. []
Citigroup Inc <C.N> posted a $2.82 billion third-quarter
loss, the bank's fourth straight quarterly loss, hurt by
increasing credit losses and write-downs tied to complex or
low-quality debt. []
Fed Chairman Ben Bernanke warned on Wednesday the economy
faced a significant threat even as authorities worked to
stabilize the financial system.
"Bernanke kind of left the door open to another coordinated
rate cut," said Marc Pado, U.S. market strategist at Cantor
Fitzgerald & Co in San Francisco.
(Additional reporting by Leah Schnurr; Editing by Kenneth
Barry)
