RTRS: Stock index futures point higher as Fed and autos eyed
By Leah Schnurr
NEW YORK (Reuters) - Stocks were set for a higher open on Monday as investors bet on more U.S. interest rate cuts as part of an aggressive campaign to stimulate growth, while uncertainty over aid for automakers lingered.
The Federal Reserve is expected to cut interest rates this week at a regularly scheduled monetary policy meeting in an effort to push more money into the sputtering U.S. economy.
In the latest news on efforts to secure government aid for ailing U.S. automakers, President George W. Bush said an announcement on a rescue for the struggling industry was not imminent, highlighting continuing uncertainty over its fate.
Lawmakers over the weekend said they expect the White House to act soon to head off a potential collapse in the industry.
An attempt to offer the three big Detroit automakers a financial lifeline failed to get past the Senate last week, but on Friday the White House said it could be willing to provide emergency funding.
"The market is expecting a bailout. Whether or not it happens this week or early next week, I think it's already in the marketplace," said Peter Cardillo, chief market economist at Avalon Partners in New York.
"If the market manages to move a bit higher in the first few days of the week, then we could probably see the year-end rally stay in tact."
S&P 500 futures were off 3 points 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 was down 18 points, and Nasdaq 100 futures were up 0.50 point.
General Motors (GM.N: Quote, Profile, Research, Stock Buzz), Ford (F.N: Quote, Profile, Research, Stock Buzz) and Chrysler employ nearly 250,000 people directly and 100,000 more jobs at parts suppliers could depend on their survival. The industry fears the failure of one Detroit manufacturer could drag down the other two, while massive job losses could exacerbate the economic slowdown.
Shares of Ford were up 3 percent at $3.13, while GM rose 4.3 percent to $4.3 in pre-market trading.
Former Dow component Honeywell International Inc (HON.N: Quote, Profile, Research, Stock Buzz) said it expects profit to decline by about 13 percent next year as it feels the effects of the deepening global recession.
The Wall Street Journal reported over the weekend that President-elect Barack Obama's team is considering a plan to boost the U.S. economy that could be larger than previous estimates and might reach $1 trillion over two years.
Underscoring global economic turmoil, Japan reported its sharpest crash in business sentiment in three decades, while industrial output in China grew at its slowest pace since 1999.
More banks revealed exposure to the alleged $50 billion fraud surrounding Wall Street trader Bernard Madoff, including Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), Man Group (EMG.L: Quote, Profile, Research, Stock Buzz) and Nomura (8604.T: Quote, Profile, Research, Stock Buzz).
On Friday, stocks rose on hopes that there could still be a rescue package for ailing U.S. automakers, while investors bet the large stockpiles in cash at technology companies will help them weather the economic downturn.
The gains helped the broad market recover further from the S&P 500's 11-year intraday low hit on November 21. So far this year the S&P 500 is down about 40 percent, but since the November low it has pulled itself back up almost 19 percent.
