In the U.S.: Stock Futures Rise As Spain Asks For Bailout

11 June 2012


A good ‘risk-on’ Monday to you too! However, “any pop that you get probably won’t be sustainable.”

U.S. stock futures advanced, following the biggest weekly rally for the Standard & Poor’s 500 Index this year, as Spain asked for a bailout to help shore up its banks and China’s exports beat economists’ estimates.

Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) added more than 1.3 percent, following a measure of European lenders higher. Apple Inc. (AAPL) increased 1.2 percent before it debuts a fresh lineup of computers and software tools to woo consumers and keep developers making applications amid accelerating rivalry from Google Inc., Microsoft Corp. and Facebook (FB) Inc.

S&P 500 futures expiring in September climbed 0.4 percent to 1,327.10 at 8:44 a.m. New York time. The benchmark gauge for American equities rose 3.7 percent last week amid speculation European and American central banks will join China in trying to spur economic growth. Dow Jones Industrial Average futures added 53 points, or 0.4 percent, to 12,556 today.

“This Spanish deal will at least alleviate some concern as we wait another week for the Greek election,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a phone interview. “This situation has been dragged out for longer than anybody wanted.”

Equity futures joined a global rally after Spain requested as much as 100 billion euros ($125 billion) of European bailout funds to shore up its banking system. The crisis in Spain, coinciding with the prospect of Greece leaving the euro after elections on June 17, roiled markets around the world, sending the euro to an almost two-year low on June 1 and pushing Spanish borrowing costs to near euro-era records.

Bear Market

European officials have failed to control the spread of the debt crisis that started in Greece at the end of 2009 and has now required a bailout of the euro area’s fourth-largest economy. Concern about a deepening of the region’s turmoil almost drove the S&P 500 into a bear marketlast year as the index tumbled more than 19 percent between April 29 and Oct. 3. Since then, the index surged as much as 29 percent to a four- year high in April, then lost 6.6 percentthrough last week.

“The Spanish deal is another Band-Aid,” said Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor Inc. in Cincinnati. He spoke in a telephone interview. “Any pop that you get probably won’t be sustainable. Many investors are viewing this with skepticism. The problem is not going to be fixed by this amount. It’s not a solution, and people know the difference. Expect more volatility not less.”

U.S. stock futures also rose after China’s exports increased in May at more than double the pace analysts estimated while industrial output and retail sales trailed forecasts, signaling that last week’s interest-rate cut was aimed at countering a domestic slowdown.

Financial Shares

Financial companies gained as a measure of European lenders advanced 1.1 percent. Bank of America climbed 2.1 percent to $7.72. JPMorgan added 1.4 percent to $34.14.

Apple gained 1.1 percent to $586.60. The company will use the Worldwide Developers Conference starting today in San Francisco to debut Mac computers with high-definition screens, as well as features for the software that powers its iPhone and iPad.

Some stocks rallied on analysts’ upgrades. Nvidia Corp. (NVDA) advanced 3.1 percent to $12.49 after UBS AG recommended buying the shares. Time Warner Inc. (TWX) gained 2.5 percent to $36.10 as Sanford C. Bernstein & Co. raised its rating for the owner of movie, television and publishing businesses.

Facebook slipped 0.6 percent to $26.95. The biggest social networking company on June 8 completed its third straight weekly loss since it went public in May.

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