Futures Gain After Sharp Decline on Auto Doubts
US stock index futures pointed to a higher open Tuesday, following a sharp decline in the previous session as investors digested the Obama administration’s tough stance on General Motors and Chrysler.
- Dow 30: Extended Hours Quotes
- Pre-Markets/Futures Data
The prospect of major restructuring or bankruptcy loomed for the automakers as President Barack Obama rejected earlier calls for emergency government cash.
GM shares gained 1.1 percent in premarket trading after dropping 25 percent Monday.
The major indexes were poised for gains just shy of 1 percent across the board. The Standard & Poor's 500 was poised for its biggest monthly gain since October 2002.
Futures were little affected by a report showing an annualized drop of 19 percent in housing prices. The Standard & Poor's Case-Shiller Home Prices Indices gauge of housing prices was worse than analyst estimates.
Elsewhere, Obama headed to London for the G20 summit to combat the global recession, where issues such as protectionism, financial regulation and government bailouts were set to dominate the agenda on Wednesday.
Following the abrupt departure of GM’s CEO Rick Wagoner, who was forced to leave the trouble automaker, Bank of America’s Chief Executive Kenneth Lewis could be next in the firing line. Powerful shareholders have been calling for his resignation since the bank received $45 billion in government bailouts.
BofA shares were up 5.5 percent premarket.
Another of the contributors to Monday's slide, Citigroup , also saw shares gained 7 percent premarket after sliding nearly 12 percent the previous day.
In Europe, the banking sector remained sharply in focus as Barclaysshunned an offer from the UK government to insure risky assets and Fortisposted a $37 billion loss in 2008.
Barclays also is in talks to sell its iShares exchange-traded fund group to CVC Partners for about $4.3 billion. Company shares traded on the New York Stock Exchange gained 4.4 percent premarket.
Also in banking, shares of HSBC moved about 5 percent higher premarket after the bank reiterated its position that it will not need capital infusions from any government.
Another tepid sign of a recovery in housing helped boost futures. Home builder Lennar reported a loss of 98 cents a share that was not as bad as analysts expected, and its shares were up 4.5 percent premarket.
Meanwhile, Warren Buffett is set to back break-away banker Byron Trott, who is leaving Goldman Sachs to start his own merchant-banking firm. Buffett told the Wall Street Journal that Berkshire Hathaway is planning to invest in the new company.
Google shares also gained premarket after the search engine giant formally announced its venture capital fund, which will be used for investment in industries ranging from biotech to software. Shares gained 1.5 percent premarket.
Also, Nokia shares rose 1.8 percent on news that it has signed a contract in which China PTAC Communication will buy $1.76 billion in mobile devices from Nokia this year.
On the economic front, January’s Case-Shiller house price index is due to be released at 9 am New York time and March’s Chicago PMI is out at 9:45 am. Consumer confidence for March is out at 10 am.
Minneapolis Federal Reserve President Gary Stern is due to take to the stage at 9 am to talk about the financial crisis in Washington. And Philadelphia Fed President Charles Plosser will speak on financial regulatory reform at 1 pm in Chicago.
The Senate Finance Committee will meet to discuss TARP oversight at 10 am.