NEW YORK (Reuters) - - U.S. stock futures rose on Wednesday as news of a tentative agreement to provide aid to U.S. automakers including General Motors (GM.N: Quote, Profile, Research, Stock Buzz) calmed investor worries.
But signs of further deterioration in the world economy and the profit outlook, including big job losses at an international mining company, fueled caution a day after stocks snapped a two-day streak of gains.
Without government help. investors fear that a possible failure or bankruptcy in the auto sector could send shock waves
through the economy and worsen unemployment.
The White House and congressional Democrats on Tuesday night reached an agreement in principle on a $15 billion proposal for bailing out U.S. automakers, officials said.
"Investors have been concerned about the continued acceleration of the market free-falling with significant bad news events," said Rick Meckler, president of investment firm LibertyView Capital Management in New York.
But news of the auto agreement should spur "more of a relief rally than the feeling that this is something good for the markets itself."
S&P 500 futures were 12 points higher and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 100 points, and Nasdaq 100 futures gained 17.50 points.
Shares of GM were up 4.6 percent in Europe and Ford gained 2.8 percent.
Stocks in Asia rose overnight, sending the Hang Seng index up nearly 6 percent, as investors bet on stimulus measures from Beijing. Hopes for a U.S. auto deal also contributed to the gains, and European shares edged higher, lifted by miners.
Global miner Rio Tinto (RIO.AX: Quote, Profile, Research, Stock Buzz)(RIO.L: Quote, Profile, Research, Stock Buzz)(RTP.N: Quote, Profile, Research, Stock Buzz) said it planned to cut 14,000 jobs and reduce capital expenditures by $4 billion in 2009. Chinese imports and exports unexpectedly fell in November, which underscored the breadth and the depth the global slump.
Democrats have arranged to have the U.S. House of Representatives vote on the auto rescue bill as early as Wednesday and send it to the Senate for consideration.
Also likely to lend support to the market was a rebound in oil prices, which could boost energy shares. U.S. front-month crude was up nearly 2 percent to $44 a barrel.
U.S. stocks fell on Tuesday as profit warnings from FedEx Corp (FDX.N: Quote, Profile, Research, Stock Buzz) and others prompted investors to retrench after two days of big gains, while unprecedented demand for the safety of government securities signaled fear remains a dominant force in the market.
Year-to-date the S&P 500 is off 39.5 percent, but has gained 18 percent since hitting its bear market low of November 21. From its 2007 record, the index is off about 43 percent.
