NEW YORK - Stocks are poised for a cautious start on Friday as investors wait for a rush of economic data they hope will offer evidence the U.S. economy is gathering momentum after Wall Street's rally since mid-March. "Based on the action we have seen, people are confident that the worst is over for the economy and that you will see a nice uptick in corporate profits," said Peter Boockvar, equity strategist at Miller Tabak & Co. "We just now need substantiation from economic reports." A key measure of inflation will grab center stage before the market opens after the U.S. producer price index on Thursday showed that wholesale prices posted their biggest drop on record last month. Worries over possible deflation, a widespread decline in prices that hits profits, are growing on Wall Street. The Labor Department's Consumer Price Index (CPI), due at 8:30 a.m. EDT, is forecast to have fallen 0.1 percent in April after rising 0.3 percent in March, according to economists polled by . The core CPI, the index without its food and energy components, is estimated to have risen 0.2 percent in April after being flat in March.
Dell Computer Corp. may add pressure to the market during the day. The No. 1 personal computer maker posted higher quarterly profit and revenue but its results and outlook did not exceed expectations. Analysts said the company needed to indicate faster growth to justify the recent rise in its stock to 2 1/2-year highs. Dell fell to $31.25 before the open after ending at $32.18. Equity futures pointed to a flat to slightly lower open before the CPI report. Standard & Poor's 500 stock index futures for June shed 1.10 points to 945.20, while Nasdaq futures for the same month eased 4 points to 1,159.50. Dow Jones Industrial futures lost 12 points at 8,685. Another report before the open is expected to show April housing starts remained healthy with the help of low mortgage rates. The Commerce Department's report, also due at 8:30 a.m., is expected to show U.S. housing starts totaled a seasonally adjusted, annualized 1.736 million in April, down from 1.780 million in March, according to a poll.
A bigger wild card is the Michigan consumer sentiment report at 9:45 a.m. (1345 GMT). Analysts have forecast, on average, the measure will hit 86.9, a tiny gain from 86.0 in April. Stocks have jumped since mid-March, leaving market watchers split as to whether the market has run up too far, too fast or Wall Street has more room to rise. Morgan Stanley's senior investment strategist Byron Wien sides with the bulls. He said at an investment meeting hosted by The New York Society of Security Analysts on Thursday night that the U.S. stock benchmark, the Standard & Poor's 500 index , is currently undervalued and likely to rally past the 1,000 mark in coming months. Stocks rose on Thursday, hoisting Nasdaq to an 11-month closing high, as investors focused on positive comments and profits from technology companies instead of weak reports on the U.S. economy. The tech-laced Nasdaq Composite rose 16.48 points, or 1.07 percent, to 1,551.38, its highest close since June 2002. The blue-chip Dow Jones industrials gained 65.32 points, or 0.76 percent, to 8,713.14. The S&P 500 advanced 7.39 points, or 0.79 percent, to 946.67, ending at its highest level since late August 2002. European blue chips rose toward four-month highs on Friday as analysts became less pessimistic on the outlook for corporate earnings and as investors snapped up volatile shares such as insurers and media. The Tokyo stock market ended flat on Friday.//