MW: Stock futures point to carryover from Monday's surge
By Steve Goldstein, MarketWatch
NEW YORK (MarketWatch) -- U.S. stock futures pointed to a second rally after the biggest one-day point gain ever for the Dow Jones Industrial Average, as the U.S. government announced a plan to inject $250 billion into the country's largest banks.
Stock index futures hit session highs Tuesday as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke offered reassurances about the government's bank rescue plan, saying it would work, while detailing Washington's intention to buy equity stakes in major U.S. financial institutions. See related story.
President Bush formally announced the U.S. would follow on the Group of Seven nations' rescue plan in a series of temporary measures.
Futures for the Dow Jones Industrial Average surged as much as 370 points before backing off, more recently up 280 points at 8,788.
Those for the S&P 500 advanced 35.70 points to 1,052.40, while Nasdaq 100 futures climbed 21 points to 1,479.50.
In an illustration that massive government bailouts and debt and deposit guarantees are starting to thaw frozen interbank lending markets, key short-term lending rates fell again Tuesday. See Libor report.
Yields on the 10-year Treasury bond rose over the 4% mark for the first time since August, signaling weakness in prices for government debt, while the dollar continued to build on its recovery against the Japanese yen, rising 0.9% to 102.90 yen.
Crude-oil futures also gained, recently up $2.91 to stand at $84.10 a barrel.
After a three-day break, the Nikkei 225 Average surged 14.2% in Tokyo, while in London, the FTSE 100 climbed a further 6.3%.
Manic Monday
U.S. stocks sprang higher on Monday for the first day in nine, as bullish investors stepped up after international government actions revived confidence in the banking sector and credit markets.
Shares of blue chip General Motors Corp. surged more than 30% after reports the auto giant had contemplated a merger.
The Dow industrials rose 936 points, the S&P 500 added 104 points and the Nasdaq Composite put on 194 points.
Investor attention focused on the financials sector, as the government plan to inject capital into several top institutions, including Citigroup Inc J.P. Morgan Chase and Bank of America Corp. "These are healthy institutions, and they have taken this step for the good of the U.S. economy," Treasury Secretary Henry Paulson said in prepared remarks.
On the earnings front, several companies took a cautious posture.
Johnson Controls Inc. forecast 2009 earnings to drop, PepsiCo Inc reported a lower profit for the third quarter and said it would slash 3,300 jobs, and Ingersoll-Rand Co. cut its earnings outlook.
But pharmaceutical giant Johnson & Johnson nudged its 2008 earnings outlook higher on solid sales growth for its consumer products and a favorable foreign-exchange rate, as the Dow industrials component reported third-quarter results. Read full story.
Fellow blue chip Intel Corp reports financial results after Tuesday's close.
