Wall Street eyes higher open on rate-cut hopes

NEW YORK (Reuters) - Stocks headed for a higher open on Monday as investors speculated that the Federal Reserve would cut interest rates further to forestall the effect of the housing downturn on the economy.

Shares of General Motors Corp. rose 4 percent before the opening bell on optimism that the automaker will reach a settlement with the United Auto Workers union to avert a strike.

On the technology front, shares of EMC Corp , a maker of corporate data storage equipment, gained more than 3 percent to $19.69 before the bell after two brokerages raised their ratings on the company.

Another standout before the open were shares of Apple Inc , which climbed nearly 2 percent to $146.77, after Citigroup raised its price target on the stock, according to a report by theflyonthewall.com.

A sustained advance would help stocks add to Friday's gains, which sent U.S. equities to their best weekly performance since March.

"There's hope that there's another rate cut coming by October or so," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto, Canada. "You also have oil prices starting to move lower, which may be enticing some investors as well."

S&P 500 futures were up 4.2 points, above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures were up 34 points, and Nasdaq 100 futures rose 9.25 points.

GM shares rose to $36.35. The UAW set a strike deadline for 11 a.m. (1500 GMT) on Monday following unsuccessful bargaining at the weekend.

Kumar said the strike threat "could just be part of the negotiating tactic. I think the union does recognize the automobile industry needs to be structured."

A drop in the dollar boosted the appeal of U.S. equities to foreigners by making stocks cheaper, said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.

The U.S. currency sunk to a record low against the euro for a third straight session on Monday following the Fed's decision on Tuesday to cut interest rates by a hefty 50 basis points.

On Friday the Dow and S&P turned in their best weekly performance since March. The advance built on the euphoria that followed the Fed's aggressive interest-rate cut on Tuesday.