Stocks Higher Ahead of Jobs Data

A downgrade of Microsoft has limited impact.

Author:: Robert Holmes
Publish date:: Jan 6, 2006 7:17 AM EST

Stocks firmed early Friday as traders looked past a downgrade of

Microsoft

and went long ahead of the monthly employment report.

Index futures recently showed the

S&P 500

trading 2 points above fair value, while the Nasdaq 100 was set for a 2.5-point gain. The 10-year Treasury bond was down 2/32 in price to yield 4.36%, 4 basis points above the two-year yield, while the dollar rose against the yen.

Investors will take their cue Friday from the Labor Department's December jobs release, which is expected to a show a 200,000-person increase to U.S. payrolls and an unemployment rate of 5%, unchanged from November. A better-than-expected payroll number could hurt stocks because of its implications for interest-rate policy.

Heading into Friday, the

Dow Jones Industrial Average

is up 164 points, or 1.5%, this week, while the S&P 500 has risen 25 points, or 2%, and the

Nasdaq Composite

is up 72 points, or 3.3%.

Oil was another factor Friday as crude prices continued to defy gravity amid fresh speculative inflows and evidence of a strong economy. February crude was recently up 66 cents to $63.45 a barrel, its highest level since early October.

Overseas markets were flat to higher, with London's FTSE 100 recently up 0.2% to 5701 and Germany's Xetra DAX unchanged at 5516. In Asia, Japan's Nikkei was flat overnight at 16,428, while Hong Kong's Hang Seng added 0.5% to 15,344.

Among stocks, Microsoft was cut to neutral from buy at CSFB, which cited recent price appreciation. The stock closed just under $27 Thursday after spending most of October below $25.

IBM

(IBM) - Get Report

will stop contributing to employee pensions starting in 2008, instead putting funds in 401(k) plans where employees must direct their own investing. The move is part of a trend away from costly "defined benefit" plans at many companies.

Shares of

Take-Two

(TTWO) - Get Report

fell 8% late Thursday after the video-game company reported a 70% plunge in fourth-quarter earnings and cut guidance for the current quarter and year. Fourth-quarter earnings also missed estimates.

Accenture's

(ACN) - Get Report

first-quarter earnings topped estimates. The consultancy earned $214.9 million, or 36 cents a share, compared with $196.3 million, or 32 cents a share, a year earlier.Net revenue grew 12%.