Wall Street is expected to edge higher in quiet trading on Thursday, the first day of the third quarter, with film studio Metro-Goldwyn-Mayer Inc. a focus on the possibility it could become the target of a bidding war. Health stocks may be buoyed after Charles River Laboratories Inc. said on Thursday it would acquire Inveresk Research Group Inc. Trading is expected to slow down ahead of the Independence Day long weekend, however, after the Federal Reserve's anticipated quarter-point rate hike on Wednesday, its first since May 2000, and accompanying comments suggesting further increases will be measured. "The reality is that we have the most important news out for the week. It was not damaging and people now want to get away for the long weekend," Barry Hyman, equity market strategist, Ehrenkrantz King Nussbaum. "We start looking to next week and corporate earnings for the second quarter." S&P 500 futures for the September contract rose 1.4 points to 1141.80, or 1.9 points above fair value, accounting for dividends, interest rates and time to expiration on the contract. Dow Jones industrial futures rose 9 points on the September contract, while Nasdaq 100 futures rose 0.5 of a point.
With little other news, acquisitions are expected to be the main driver of stocks at the open on Thursday. Time Warner Inc. is quickly putting together a cash-and-stock offer to acquire MGM, the home of James Bond films, which would rival a proposal from Sony Corp. <6758.T>,said a source who knew of Time Warner's plans. The $4.8 billion offer by Time Warner for MGM would include assumed debt. MGM traded at $13.04 on the INET electronic brokerage on Thursday, up from its close of $12.10 on the New York Stock Exchange on Wednesday. Charles River Laboratories said it would acquire drug development services provider Inveresk Research Group for roughly $1.5 billion in cash and stock. Inveresk changed hands at $36 on INET, up from its close of $30.84 on the Nasdaq on Wednesday. Ceradyne Inc. , a maker of ceramic body armor for the military and police, has agreed to to acquire Germany's ESK Ceramics for $136 million in cash, according to a regulatory filing by Ceradyne on Thursday.
CARDINAL SUBPOENAED
Emulex, the third-most active stock on INET, last traded at $12. It closed at $14.31 on the Big Board at the prior close. The maker of adapters used in data storage said on Thursday it cut its earnings forecast citing tepid demand from two customers during the end of the quarter. J.P. Morgan cut its rating on the stock to "neutral" from "overweight". Drug wholesaler Cardinal Health Inc may fall after being subpoenaed by the U.S. Securities and Exchange Commission on how it classified revenues and cutting its 2004 estimates for earnings growth. Orthopedic device maker Biomet Inc. may move after it said its fiscal fourth-quarter profit rose, helped by demand for reconstructive implants and spinal hardware products. Shares of Merix Corp. changed hands at $10.01 on INET after the printed circuit boards maker said its first-quarter earnings would fall well below expectations. The stock closed at $11.34 on Wednesday. Constellation Brands Inc. ,the distributor of Corona beer and Arbor Mist wines, may gain after it reported a better-than-expected quarterly profit, excluding one-time items.. Churchill Downs Inc. , which operates horse racing tracks and hosts the Kentucky Derby, on Wednesday lowered its second quarter and 2004 earnings forecasts.///