Stock futures rose sharply Monday as investors gained confidence in the banking sector following the passage of new global regulations and China's economy continued its robust growth.
A round of corporate dealmaking also gave a lift to stock futures. Hewlett Packard Co. said it will purchase security software provider ArcSight Inc. Dollar Thrifty Automotive Group Inc. said it accepted Hertz Global Holdings Inc.'s acquisition offer.
Acquisitions are often a sign that companies are confident the economy is going to expand soon.
Global regulators agreed to reforms that could help avoid another credit crisis that plagued financial markets worldwide in 2008. Banks will gradually have to increase their reserves to protect against potential losses. The new regulations have added to confidence inEurope's banks, which have been slower than their U.S. counterparts to bolster reserves. European markets rose sharply Monday.
Confidence in European banks was shaken early last week as investors questioned whether they could absorb potential losses on risky government debt.
Fresh signs of strong economic expansion in China also added tomarket strength Monday. New economic reports showed growth in the world's second-largest economy continues to accelerate at a time when economists were expecting it to slow. Strong growth in China is considered vital to a global recovery because if demand remains high there, it will offset sluggish growth in the U.S. where economic expansion is not as strong.
Ahead of the opening bell, Dow Jones industrial average futures rose 77, or 0.7 percent, to 10,470. Standard & Poor's 500 index futures rose 9.00, or 0.8 percent, to 1,113.90, while Nasdaq 100 index futures rose 14.25, or 0.8 percent, to 1,904.00.
Britain's FTSE 100 rose 1.1 percent, Germany's DAX index gained 0.9 percent, and France's CAC-40 rose 1.2 percent. Japan's Nikkei stock average climbed 0.9 percent.
U.S. stocks rallied over the past two weeks pausing only once during that stretch because of worries about European banks. Otherwise, traders have been encouraged by recent economic reports that have topped modest expectations. Recent data has relieved worries that the economy might slip back into recession, though it still indicates growth will be slow.
The Dow has climbed seven of the past eight days and is up 4.5 percent in September, which is typically one of the weakest months of the year for the market.
Trading volume is expected to pick up this week as traders return from summer vacations and recent holidays.
Hewlett-Packard, which has been buying up smaller companies in recent months, will pay $1.5 billion, or $43.50 per share, in cash for AcrSight.
Hertz agreed to pay $1.43 billion, or $50 per share, for Dollar Thrifty, beating out competitor Avis Budget Group Inc. in a bidding war to acquire the rival rental car company.
Genzyme Corp. said it will sell its genetic testing business to Laboratory Corp. of America Holdings for $925 million. The sale comes after Genzyme rebuffed an $18.5 billion takeover bid from French pharmaceutical company Sanofi-Aventis.
Laboratory Corp. of America rose 8 cents to $76.73 in pre-opening trading.
Dollar Thrifty rose $2.14, or 4.5 percent, to $50.15, while Hertz rose 15 cents to $10.20.
ArcSight jumped $8.77, or 25 percent, to $43.87, while Hewlett-Packard rose 27 cents to $38.55.
Treasury prices fell as investors worldwide moved into stocks. The yield on the 10-year Treasury note, which moves opposite its price, rose to 2.82 percent from 2.79 percent late Friday. Its yield is often used to help set interest rates on mortgages and other consumer loans.
Oil prices continued to rise as a leak in a pipeline that supplies oil to refineries in the Midwest remains closed. Benchmark crude rose 66 cents to $77.11 in electronic trading on the New York Mercantile Exchange.
Posts
