WSJ:US Stock Futures Up On Euro Bank Plan Hopes; Dollar Falls
By Simon Kennedy
U.S. stock market futures rose Monday as France and Germany pledged to do everything necessary to support Europe's banks, while investors also looked ahead to the start of third-quarter earnings season.
Futures on the Dow Jones Industrial Average gained 125 points to 11191 and those on the Standard & Poor's 500 index rose 14.75 points to 1169.75. Nasdaq 100 futures were up 29.25 points to 2231.
The gains for futures came after U.S. stock markets closed slightly lower on Friday, as downgrades of Italy and Spain offset stronger-than-expected payrolls data.
European stocks were higher Monday as steps to battle the sovereign debt crisis continued to inch ahead. German Chancellor Angela Merkel and French President Nicolas Sarkozy said over the weekend that they will reveal plans to recapitalize the banking sector before the end of the month.
Lender Dexia SA (DEXB.BT) said it agreed to a rescue package that includes up to EUR90 billion ($122 billion) of debt guarantees from the governments of Belgium, France and Luxembourg.
The French CAC 40 index rose 1.1%. Asian markets were mixed, with Australia's S&P/ASX 200 index among the strongest performers, adding 0.9%.
Morten Kongshaug, an equity strategist at Danske Bank, said Germany has been at odds with France and other nations over where the money should come from to repair banks and whether private-sector investors should face losses.
"The market is hoping that the Germans will give in to pressure from the likes of France and China," Kongshaug said.
He added that he believes equity markets are pricing in too high a chance of recession in the U.S.
"It's slow growth that is most likely, and I think the jobs report on Friday showed that," Kongshaug added.
Federal government offices will remain closed Monday for the Columbus Day holiday, meaning there's no economic data on tap. U.S. bond markets will also be closed for the holiday.
The euro rose sharply against the dollar, adding 1.4% to $1.3594 after the French and German assurances on the banking sector. The dollar index fell 1.2% to 77.80.
Oil and precious metals futures rose as the dollar dropped. Gold for December delivery rose $28.20, or 1.7%, to $1,664 an ounce and the November light crude contract rose $1.48 to $84.46 a barrel.
Among companies in focus Monday, Superior Energy Services Inc. (SPN) agreed to buy Complete Production Services Inc. (CPX) in a cash and stock deal worth around $32.90 a share at Friday's closing prices.
AT&T Inc. (T) said late Friday that it has seen "extraordinary demand" for the iPhone 4S, with more than 200,000 pre-orders for Apple Inc's (AAPL) new phone taken in the first 12 hours.
Investors will also be looking ahead to a slew of big-name earnings reports later in the week. Third-quarter results season unofficially gets underway after Tuesday's close with figures from Alcoa Inc. (AA), while J.P. Morgan Chase & Co. (JPM) and Google Inc. (GOOG) are due to report their results on Thursday.
