us stocks set to recover

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    S&P 500 Futures Are Little Changed; Morgan Stanley to Report

    Sept. 21 (Bloomberg) -- U.S. stock-index futures were little changed after the Standard & Poor's 500 Index dropped to the lowest in three weeks yesterday following the 11th consecutive interest-rate increase by the Federal Reserve.

    Alcoa Inc., the world's largest aluminum maker, advanced in Europe, and Wal-Mart Stores Inc., the biggest retailer, declined. Morgan Stanley, the largest U.S. securities firm by market value, is expected to report record earnings today.

    The S&P 500 futures expiring in December added 0.6 to 1228.2 at 10:19 a.m. in London. Dow Jones Industrial Average futures advanced 2 to 10,525, while Nasdaq-100 Index futures dropped 0.5 to 1591.5.

    ``Basically, we feel the economic story is going to be pretty good,'' said Simon Clinch, director of U.S. equities at F&C Asset Management in London, which has around $4 billion invested in U.S. stocks. ``The main risk is the oil price.''

    The Fed raised its benchmark rate a quarter point to 3.75 percent, the highest in four years, saying the U.S. economy faced only a ``near-term'' setback after Hurricane Katrina.

    Oil rose today as producers in the Gulf of Mexico evacuated staff and closed rigs in the path of Hurricane Rita. Crude oil for November delivery increased as much as $1.40, or 2.1 percent, to $67.60 a barrel in electronic trading on the New York Mercantile Exchange.

    Alcoa gained 14 cents to $26.36 in Germany. Wal-Mart dropped 8 cents to $43.21.

    Record Profits

    Morgan Stanley probably will post its highest fiscal third- quarter earnings since 2000 on gains in trading revenue and fees from stock sales and mergers following record earnings from Wall Street rivals. The shares didn't trade in Europe.

    Net income is expected to jump 34 percent to $1.13 billion, or $1.05 a share, in the three months ended Aug. 31, according to a survey of 18 analysts by Thomson Financial.

    Goldman Sachs Group Inc., the second-biggest securities firm, yesterday said net income surged 84 percent to a record $1.62 billion. Lehman Brothers Holdings Inc. last week also posted a record profit.

    Other S&P 500 companies releasing results include Bed Bath & Beyond Inc., the largest U.S. home furnishings retailer, and FedEx Corp., the No. 2 U.S. package shipping company.

    Goodyear Tire & Rubber Co. dropped 4 cents to $15.40 in Germany. The biggest tiremaker said it may sell a business that makes hoses and conveyor belts as the company focuses on car and truck tires.


    Biogen Idec Inc. added 44 cents to $40.67 in Germany. The company and Irish partner Elan Corp., which withdrew the multiple-sclerosis drug Tysabri in February, said they will seek U.S. regulatory approval to resume sales of the drug. A safety evaluation of the medication for Crohn's disease and rheumatoid arthritis will be completed ``in the coming weeks,'' the companies said.

    Yesterday, the S&P 500 lost 9.68, or 0.8 percent, to 1221.34. The Dow average was down 76.11, or 0.7 percent, at 10,481.52. The Nasdaq Composite Index fell 13.93, or 0.7 percent, to 2131.33.

    There are no major economic reports due today in the U.S.

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