BLBG: U.S. Stock-Index Futures Advance; GM, Citigroup Gain in Europe
U.S. stock-index futures advanced, indicating the Standard & Poor’s 500 may gain on the first day of trading in 2009 after posting the biggest annual decline since the Great Depression.
General Motors Corp., the largest U.S. automaker, climbed 11 percent in Germany after receiving $4 billion in initial rescue loans from the U.S. Treasury to help it avoid collapse. Citigroup Inc. rose 1.2 percent.
The S&P 500 decreased 38.5 percent in 2008, the most since the 38.6 percent plunge in 1937 and sank to an 11-year low on Nov. 20. Volatility increased, with the index rising or falling 5 percent in a single day 18 times.
S&P 500 futures expiring in March added 0.6 percent to 905.80 at 12:21 p.m. in London. Dow Jones Industrial Average futures gained 0.6 percent to 8,782 and Nasdaq-100 Index futures increased 0.6 percent to 1,219.25.
Stocks in Europe and Asia rose today, trimming last year’s record slump in the MSCI World Index, as investors speculated governments will step up efforts to revive the global economy and lower oil prices lifted retailers.
“I’m far more optimistic for the global economy in the second half of 2009,” said Howard Wheeldon, a London-based senior strategist at global inter-deal broker BGC Partners. “Actions by global central banks and governments, and assuming there will be further moves to come, are providing an essence of the missing ingredient that we so badly need - a restoration of confidence.”
Citigroup, Obama, Fed
The S&P 500 has climbed 3.5 percent this week, extending its rebound from its 11-year low on Nov. 20 to 20 percent. Stocks rallied as the government rescued Citigroup, President- elect Barack Obama pledged to stimulate growth with spending on infrastructure projects and the Federal Reserve cut interest rates to as low as zero percent to combat the worst financial crisis in seven decades.
GM surged 11 percent to $3.55 today in Germany. The loans are part of $17.4 billion in financing that the Treasury has promised to GM and Chrysler LLC in a bid to avert a bankruptcy by either company. GM’s infusion will help the Detroit-based automaker pay suppliers as its cash dwindles.
Citigroup climbed 1.2 percent to $6.79 in Germany after losing 77 percent in New York trading last year. Chief Executive Officer Vikram Pandit and Chairman Win Bischoff will forgo 2008 bonuses after the bank lost three-quarters of its market value and got a $45 billion U.S. bailout, Pandit said on Dec. 31 in a memo to employees.
Manufacturing Report
A report at 10 a.m. New York time may show that manufacturing contracted in December at the fastest pace in almost three decades. The Institute for Supply Management’s factory index fell to 35.4, the lowest level since 1980, from 36.2 the prior month, according to the median estimate of 57 economists surveyed by Bloomberg News. A reading less than 50 signals contraction.
Europe’s Dow Jones Stoxx 600 Index climbed 2.4 percent today, while the MSCI Asia Pacific excluding Japan Index increased 1.2 percent. South Korea’s president pledged to counter the economic slowdown, while India’s central bank after the close of trading cut interest rates for the fourth time in less than three months, extending the steepest set of reductions since 2000.
At its lowest closing level of 2008 on Nov. 20, the S&P 500 was down 49 percent for the year and 52 percent from its Oct. 9, 2007, record of 1,565.15. The plunge came as more than $1 trillion in credit-related losses at global financial companies triggered the first simultaneous recessions in the U.S., Europe and Japan since World War II.
Beer and Cigarettes
Brewers and tobacco growers boosted by takeovers as well as discount retailers were about the only winners in 2008.
Anheuser-Busch Cos. jumped 31 percent after InBev NV agreed to acquire the owner of Budweiser beer to create the world’s biggest brewer. Wal-Mart Stores Inc., the biggest retailer, and restaurant operator McDonald’s Corp. were the only two companies in the 30-stock Dow average that rose.
Corporate profits have fallen seven straight quarters, according to the U.S. Bureau of Economic Analysis. Should earnings fall through the first half of 2009, as analysts surveyed by Bloomberg project, it would be the longest streak since the government began tracking quarterly data in 1947.
The Chicago Board Options Exchange Volatility Index, known as Wall Street’s fear gauge, posted a 78 percent gain to 40 in 2008. The so-called VIX, a measure of how much investors are paying for insurance from stock declines in the options market, had never exceeded 50 before October. Its close of 80.86 on Nov. 20 was the highest in its 19-year history.
