NEW YORK - U.S. stocks headed for a higher open Tuesday as oil fell by almost $7 a barrel after it appeared that the Gulf Coast and its oil facilities were spared heavy damage from Hurricane Gustav.
Beyond a broad pullback in commodities, investors also awaited a report from a trade group of purchasing executives on the manufacturing sector. The Institute for Supply Management is expected to report that the manufacturing sector saw virtually flat activity in August compared to July, according to the median estimate of economists polled by Thomson Financial/IFR. The report is due at 10 a.m. EDT.
Investors focused on the drop in oil, however, as fears that Gustav would leave a wide swath of heavy damage across the Gulf began to subside. Light, sweet crude fell $6.94 to $108.52 per barrel in premarket electronic trading on the New York Mercantile Exchange.
Beyond investors' relief over the early reports on damage from Gustav, commodity investors also appear to be questioning whether a slowing global economy will damp demand for oil and other commodities.
Dow Jones industrial average futures rose 98, or 0.85 percent, to 11,639. Standard & Poor's 500 index futures rose 8.60, or 0.67 percent, to 1,291.20 and Nasdaq 100 index futures rose 20.00, or 1.07 percent, to 1,895.00.
The jump in stock futures follows a decline of 171 points in the Dow on Friday.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86 percent from 3.82 percent late Friday. The dollar was mixed against other major currencies, while gold prices fell.
The drop in oil prices sent stocks in sectors like airlines higher. In premarket trading, American Airlines parent AMR Corp. jumped 13 percent, Delta Air Lines Inc. rose 14 percent and JetBlue Airways Corp. advanced 15 percent.
In corporate news, technology shares advanced after Google Inc. said it is releasing its own Internet browser to counter Microsoft Corp.'s Internet Explorer. Google shares rose more than 1 percent in premarket trading.
Investors also awaited an auction of at least $3 billion in long-term debt Tuesday morning from mortgage finance company Freddie Mac. The sale should give insights into investors' level of confidence in the government-chartered company. A Freddie Mac auction last month showed that investors were worried the company and Fannie Mae would need a government bailout over souring mortgage debt.
Overseas, Japan's Nikkei stock fell 1.75 percent. In morning trading, Britain's FTSE 100 rose 0.14 percent, Germany's DAX index rose 1.30 percent, and France's CAC-40 advanced 1.16 percent.