MW: U.S. futures point to higher open, driven by banks
U.S. stock futures pointed to a strong start for Wall Street on Wednesday led by financials after a report the Obama administration is nearing a deal to buy illiquid or bad assets from banking firms, while markets were also focused on a Federal Reserve meeting.
Financial stocks were up across Europe as well as a result.
S&P 500 futures rose 17.9 points to 857.1 and Nasdaq 100 futures added 27 points to 1,212.7. Dow industrial futures added 144 points to 8,237.
U.S. markets closed higher on Tuesday, wading through a heavy schedule of earnings results and taking cheer from a surprisingly positive report on the housing market. The Dow Jones Industrial Average rose 58.7 points, the S&P 500 rose 9.14 points and the Nasdaq Composite added 15.44 points.
But banks took the stage late in the day. After the close of trade, CNBC reported that Obama was nearing a "bad bank" plan, triggering a rally in financial stocks.
Bloomberg News reported on Wednesday that the Federal Deposit Insurance Corp. may manage the plan, citing people familiar with the matter.
In Frankfurt, shares of major U.S. banks were trading higher. Shares of Citigroup, Inc. were trading at $3.86, up 8% from the U.S. close Tuesday.
Bank of America was trading at $7.30, up 12%, while J.P. Morgan Chase & Co. was trading up 4% in Frankfurt at $26.13 against its U.S. close and Goldman Sachs Group, Inc. was up 3.6% at $81.12.
Banks were inspired in Europe as well, with Lloyds Banking Group up 40%, Deutsche Bank up 13.6% and BNP Paribas up 11.9%. The pan-European Dow Jones Stoxx 600 was up 1.6%.
Asia shares were trading higher with indexes in South Korea and Singapore posting catch-up gains after a long holiday break.
Another focus for U.S. markets Wednesday will be the U.S. Federal Reserve meeting. Some economists are calling for the Fed to push the Federal funds rate -- already effectively at zero - deeper into negative territory. They want the Fed to demonstrate it's pulling out all the stops on the economy.
"The Fed's job is going to be to convince markets and the broader public that they can still support the economy ... even with the funds rate at zero," said Al Broaddus, the former president of the Richmond Fed, in a television interview.
Elsewhere, Yahoo shares could gain after better-than-expected financial results.
Among a heavy schedule of earnings for Wednesday, AT&T Inc. , ConocoPhillips and Boeing Co. are due to report.
At 10:30 a.m. Eastern, weekly energy inventories will be released. Crude-oil futures were up a penny at $41.59, while gold futures fell $12 to $887.50.
The dollar remained weaker against the euro, with the shared currency fetching around $1.32, and moved further south against the yen to around 89.23 yen.
