Futures point to higher open after GDP data

By Kristina Cooke

NEW YORK (Reuters) - Stocks were heading for a higher open on Thursday after second-quarter U.S. growth was revised up much more than expected, buoying optimism about the economy.

A separate report showed the number of U.S. workers filing new claims for jobless benefits fell last week to a level that was a touch lower-than-expected.

Earlier, futures had been trading lower as oil rose toward $120 a barrel boosted by the threat of damage to U.S. oil installations in the Gulf of Mexico from Tropical Storm Gustav.

"The market is gaining increasing confidence the strain in the financial markets and high oil prices will not tip the economy into a recession," said Jim Awad, chairman, W.P. Stewart & Co. Ltd. in New York.

S&P 500 futures rose 6.9 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 gained 63 points and Nasdaq 100 futures rose 11.75 points.

Financial companies rose after Fannie Mae announced management changes on Wednesday in an effort to better implement a plan to preserve capital and cut losses. On Thursday Lehman Brothers said Fannie's capital and reserve positions are better than market perceptions, adding that it may not need more externally raised capital. Fannie shares rose more than 6 percent before the bell. Freddie shares rose about 5 percent.

Also helping financial services companies, bond insurer MBIA Inc announced late on Wednesday that it plans to reinsure a $184 billion portfolio of investment-grade U.S. public finance credits. Shares of MBIA rose 18 percent before the bell.

Apart from the higher price of oil, a weaker-than-expected profit from Sears Holdings Corp could also weigh on consumer-related companies. Sears profit fell short of expectations as it cut prices to lure shoppers in a housing slump that hurt appliance and tool sales.

The U.S. economy expanded at a stronger-than-first-reported 3.3 percent annual rate in the second quarter, as consumer spending and net exports were more robust than initially estimated and inventories fell less sharply, a government report showed.

(Editing by Kenneth Barry)

(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

More US (Business) News click here