Wall Street to rise after surprise drop in jobless rate

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Published October 05, 2012

| Reuters

Stocks were poised to rise at the open Friday, with the S&P 500 set to hit its highest since 2007, as a surprise drop in the jobless rate gives legs to this week's rally.

Labor Department data showed the unemployment rate dropped by 0.3 percentage point in September to 7.8 percent, its lowest since January 2009, even as Americans came back into the labor force to resume the hunt for work.

A survey of business establishments showed employers added 114,000 jobs to their payrolls last month, one thousand more than forecast. Employment for July and August was revised to show 86,000 more jobs created than previously reported.

"The revision to (August) and falling in line (for September) suggests there probably is some justification for futures moving higher," said Peter Jankovskis, co-chief investment officer at Oakbrook Investments in Lisle, Illinois.

The unemployment rate is a key focus in the U.S. presidential election, and Friday's data could be a boon to President Barack Obama's reelection bid.

S&P 500 futures rose 6.2 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 rose 51 points, and Nasdaq 100 futures added 14 points.

Zynga shares plummeted 22 percent in premarket trading after it slashed its 2012 outlook for a second time, fanning doubts about its ability to shore up its dwindling earnings. Facebook , which derives more than a tenth of its revenue from fees paid by Zynga, saw its shares fall 3.3 percent.

Sprint Nextel is considering making a rival bid for MetroPCS Communications , which agreed Wednesday to a merger with Deutsche Telekom's T-Mobile USA, according to people familiar with the situation.

U.S. stocks rose on Thursday following encouraging U.S. data and comments by European Central Bank President Mario Draghi on tools to tackle the region's debt crisis and in support of the euro.

(Editing by Bernadette Baum)

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