MW: U.S. stock futures rise as nationalization fears ebb
U.S. stock futures pointed to a strong opening Monday as a report the U.S. government would increase its stake but not fully take over Citigroup eased some of the nationalization fears rampant in the market.
S&P 500 futures rose 14.9 points to 784.40 and Nasdaq 100 futures climbed 22 points to 1,193.70. Dow industrial futures rose 118 points.
U.S. stocks slumped on Friday on concerns that Citi and Bank of America would have to be taken over by the government -- stoked by an interview Sen. Christopher Dodd gave to Bloomberg Television in which he suggested as much. The Dow industrials fell 100 points, the S&P 500 lost 8 points, while the Nasdaq Composite fell a point.
However, The Wall Street Journal reported that Citi is in talks with the government on Uncle Sam converting its preference shares into common equity. The U.S. government may hold between 25% and 40% of Citi, according to the report.
Citigroup's stock in Frankfurt climbed to $2.40 from $1.95 on the news. Bank of America also was stronger, trading at $4.05 vs. a $3.79 close. CEO Kenneth Lewis told employees in a weekend memo that there was "no reason" the bank should be considered for nationalization, according to reports.
Overseas, the Royal Bank of Scotland climbed in London trade on press reports that it would follow in Citi's footsteps with a good bank, bad bank break-up in which it would hive off assets it plans to sell. But in Japan, lender SFCG filed for bankruptcy protection.
Over the weekend, European members of the G 20 called for regulation of hedge funds and rating agencies and sanctions on tax havens as they also sought more funding for the International Monetary Fund to help stricken Central and Eastern European nations.
Gold futures came back from the $1,000 an ounce level, falling $15.60 to $986.60 an ounce. Oil futures were trading above $40 a barrel, and the dollar made strong inroads on the Japanese yen.
Marc Pado, a strategist at Cantor Fitzgerald, said outside of financials the picture isn't looking so dire.
"The talk was far more bearish than the reality," he said, noting that up volume exceeded down volume on the Nasdaq on Friday.
Philip Miller, chief strategist at Strategic International Securities Research, said the "noise" from Washington, which has been hurting markets, won't stand up to an improving economy, citing as evidence the rise in leading economic indicators, retail sales and both producer and consumer prices.
In Europe, the FTSE 100 rose 1.3%, helped by banks including RBS and Barclays .
Asia markets were split, with the Nikkei 225 dropping 0.5% in Tokyo and the S&P/ASX 200 falling 1.5% in Sydney, while the Kospi rose 3.2% and the Hang Seng added 3.8%.
