BLBG: U.S. Stock Futures Gain as Europe Pledges Emergency Loan Fund
By Jeff Kearns
May 10 (Bloomberg) -- Standard & Poor’s 500 Index futures advanced on speculation that a 750-billion euro ($962 billion) emergency-loan fund to support debt-laden European countries will keep the region’s credit crisis from spreading.
June contracts on the S&P 500 increased 2.9 percent to 1,139.50 at 2:23 p.m. in Tokyo, while Dow Jones Industrial Average futures climbed 2.4 percent. U.S. stocks fell the most in 14 months last week, erasing their 2010 advance, as concern about Greece’s finances and a breakdown in U.S. market systems spurred the most volatile trading in a quarter century.
Stocks around the world have been battered this month amid concern European leaders won’t do enough to keep indebted nations from defaulting. Under the unprecedented loan package, euro-area governments pledged 440 billion euros in loans or guarantees, with 60 billion euros more in loans from the European Union’s budget and as much as 250 billion euros from the International Monetary Fund. The European Central Bank said it will conduct “interventions” to ensure “depth and liquidity” in markets.
“In the short-term, it may be viewed as a positive and we may recover some of the losses we had in equities last week,” Oscar Pulido, a portfolio specialist at BlackRock Inc., told reporters in Seoul today. “In the longer-term, it’s going to be very much dependant on whether governments in these countries can truly take the measures to reduce the deficits they’ve accumulated.” BlackRock managed $3.36 trillion in assets as of March 31, according to its Web site.
The MSCI Asia Pacific Index rose for the first time in six days, adding 1.3 percent to 119.93.
Electronic Selling
European stocks had tumbled the most in 18 months last week. A measure of bank stocks slumped the most since March 2009. Bond yields surged across the region’s southern periphery, threatening to undermine the single currency.
Waves of electronic selling helped push the Dow Jones Industrial Average down as much as 9.2 percent on May 6, the biggest drop since the crash of 1987, before paring losses. The VIX, the benchmark index for U.S. stock options, surged 86 percent to 40.95 for the biggest weekly gain in its history.
The selloff “was a warning sign that things are not as great as they think,” said Stephen Davis, a portfolio manager at Alpine Woods Capital Investors LLC, which oversees $7 billion in Purchase, New York. “I don’t think it means you need to panic, but you need to think about the stocks you’re holding and why.”
Concern about Europe’s debt overshadowed the biggest jump for U.S. payrolls in four years. The increase of 290,000 jobs exceeded the median estimate of economists surveyed by Bloomberg News, led by gains in private employment that indicate the economy is weaning itself from government support. The jobless rate rose to 9.9 percent from 9.7 percent as thousands of jobseekers entered the workforce.
To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net;
