AP: Wall Street heads to higher open on China stimulus
By JOE BEL BRUNO
NEW YORK (AP) — Wall Street headed for a higher open Monday, boosted by hopes that China's $586 billion economic stimulus package will help ease the global recession.
Futures for the Dow Jones industrial average and broader market indexes rose more than 2 percent ahead of the opening bell in New York. The advance follows a rally in Asia and Europe after China announced plans to boost its economy through a mix of spending, subsidies, looser credit policies and tax cuts.
Also boosting U.S. markets, the government on Monday provided new financial assistance to troubled insurance giant American International Group Inc., including pouring $40 billion into the company in return for partial ownership. The action was announced jointly by the Federal Reserve and the Treasury Department.
All told, the moves, on top of the bailout of AIG announced in September, boost aid to the insurer to around $150 billion. AIG also announced a $24.47 billion loss for the third quarter.
Investors are also watching for developments with General Motors Corp., Chrysler and Ford Motor Co. after the automakers met with congressional leaders last week in hopes of securing financial help.
Democratic leaders in Congress asked the Bush administration on Saturday to provide more aid to the struggling auto industry, which is losing money and jobs as sales have dropped to their lowest level in a quarter century. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout program to include car companies.
Dow futures jumped 148, or 1.62 percent, to 9,144. Standard & Poor's 500 futures rose 20.30, or 2.17 percent, to 956.50. Nasdaq 100 index futures added 24.50, or 1.90 percent, to 1,313.00.
Last week, the major indexes each lost about 4 percent. Trading this week is expected to remain volatile as the market tries to recover from October's devastating losses.
With stocks heading for a higher open, some investors moved out of the relative safety of government bonds. The three-month Treasury bill's yield rose to 0.32 percent from 0.28 percent late Friday. A higher yield indicates less demand. The yield on the benchmark 10-year Treasury note rose to 3.83 percent from 3.79 percent late Friday.
Oil prices jumped above $63 a barrel Monday in Asia as regional stock markets rallied on China's economic stimulus plan, which could underpin demand for crude. A barrel of light sweet crude rose $4.42 to $65.46 in electronic trading on the New York Mercantile Exchange.
With no major economic data due during the session, investors will turn to corporate news for direction. Investors later this week will pore over a stream of reports, including retail sales, the labor market and consumer sentiment.
Citigroup Inc. is in talks to acquire a regional bank to boost the bank's presence in areas it already operates, including the Northeast, California and Texas, according to a report in The Wall Street Journal. The report, which did not name a potential target, said Chief Executive Vikram Pandit is attempting to broaden the bank's deposit base.
Circuit City Stores Inc. filed for bankruptcy protection about a week after it said it would close 20 percent of its stores. The electronics retailer, based in Richmond, Va., has been struggling as nervous consumers spend less and credit has become tighter.
Mail and logistics company Deutsche Post AG says it will cut 9,500 jobs and close all of its DHL express service centers in the U.S. amid heavy losses in the market there. The cuts are part of a wider plan to curtail operations in the U.S., including ground deliveries, and are likely to affect drivers, shipping clerks and warehouse workers. The express unit employs some 18,000 workers.
Power generator NRG Energy Inc. on Sunday rejected an unsolicited $6.1 billion all-stock bid from nuclear power giant and utility operator Exelon Corp., calling the offer too low. The deal would create the nation's largest power company.
Overseas, Japan's Nikkei stock average closed up 5.81 percent, and Hong Kong's Hang Seng index added 3.52 percent. In Europe, the Britain's FTSE 100 rose 2.87 percent, Germany's DAX added 3.22 percent, and France's CAC-40 rose 2.95 percent.
