U.S. stock futures rose on Thursday as markets interpreted news that Bank of America is repaying the government $45 billion as a sign that economic conditions are improving.
S&P 500 futures rose 3.3 points to 1,111.20 and Nasdaq 100 futures gained 2.25 points to 1,793.70. Futures on the Dow Jones Industrial Average rose 27 points.
U.S. stocks were languid on Wednesday, with the Dow Jones Industrial Average retreating 19 points while the S&P 500 rose fractionally and the Nasdaq Composite rose 9 points. ADP estimated job losses of 169,000 but the Fed’s Beige Book said economic conditions improved modestly.
Goldman Sachs Group Inc. (GS) authored their first eight recommended trades for 2010, which include a bet against volatility in the S&P 500, a pick for Russian stocks and growth in the British pound vs. the New Zealand dollar.
The bank sees 4.4% global growth in 2010 and 4.5% in 2011, but no increase in short term interest rates in the U.S.
“This would appear to be rather positive for risky assets, potentially sowing the seeds for fresh asset overvaluations down the road,” the strategists said. “This in turn – as you can imagine – makes us somewhat nervous about many possible risks out there, including those that relate to the Fed tightening earlier than we currently expect.”
Markets will get a read on central bank risks, as the European Central Bank at 7:45 a.m., EST, is due to make an interest rate decision, ECB President Jean-Claude Trichet is due to give a press conference at 8:30 a.m., EST, and Federal Reserve Chairman Ben Bernanke is due to testify at his confirmation hearing at 10 a.m., EST.
Also out will be data on weekly jobless claims, a revised calculation of third-quarter productivity, and the ISM non-manufacturing index for November.
Retailers also will be reporting same-store sales for November. The International Council of Shopping Centers, after two downward revisions, expects sales to rise between 3% and 4%.
Attention also will be on the banking sector as Bank of America Corp. (BAC) late Wednesday said it’s going to repay $45 billion of TARP (Troubled Asset Relief Program) funds, including through the sale of $18.8 billion of securities.
Bank of America (BAC) rose 3.7 in pre-market trade.
The long awaited NBC Universal deal between Comcast Corp. (CMCSA) and General Electric Co. (GE), with GE getting $8 billion in cash out of the deal in which Comcast will hold a 51% stake. Comcast also announced it was increasing its dividend by 40%. Shares of both Comcast and GE rose marginally.
The Nikkei 225 rallied 3.8% in Tokyo, helped by hopes that steps will be taken to weaken the yen and also by talks that could lead to PSA Peugeot Citroen (UG.FR) buying up to a 50% stake in Mitsubishi Motors Ciro, (MMTOY), news that sent the Japanese auto maker surging.
Other international markets also advanced, with the FTSE 100 up 0.2%.
Oil futures rose 47 cents to $77.07 a barrel, while gold futures added nearly $5 an ounce. The dollar rose vs. the yen but dropped against the euro ahead of the ECB decision.
By Steve Goldstein – wsj.com
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