Futures Rally as Banks, Autos Lead Way
Stocks looked set to continue their positive start to the quarter and jump higher at the open Thursday, as investors looked more favorably on banking shares ahead of pivotal accounting rule changes.
Investors were largely unbothered on initial jobless claims numbers that hit a 26-year high, and gave futures a boost as headlines began to break on the Financial Accounting Standards Board's changes to mark-to-market accounting.
Tentative positive signs from the housing market and movement on mark-to-marketing accounting rules helped to boost sentiment Wednesday, which was feeding through to the futures. Better-than-expected auto sales also pushed the market higher.
Futures indicated gains of more than 1 percent in the major indexes off Wednesday's rally, which came amid thin volume and an apparent lack of sellers rather than a large influx of buyers.
The indexes backed off their morning highs following initial jobless claims numbers that came in higher than expected.
Bank of America shares shot higher, gaining more than 12 percent in premarket trading as the company seeks to sell asset manager Columbia Management and First Republic Bank, sources told the Wall Street Journal.
BofA shares also got a boost after CEO Ken Lewis said during a live interview on CNBCthat the bank had a "huge" capital cushion, though it would take some time before it could pay back government bailout money.
Other big bank stocks were set to reap further benefits with Citigroup up more than 16 percent, while JP Morgan Chase rallied more than 11 percent premarket.
Automakers also were up sharply after the major manufacturers all reported sharply lower sales numbers that nonetheless beat expectations. GMAC, the financing arm of General Motors, also said Wednesday that it would resume making loans to subprime borrowers in order to spur sales.
GM shares soared 19 percent premarket and Ford was up more than 8 percent.
Also indicating higher was CNBC.com parent General Electric , which rose nearly 6 percent premarket on anticipation of an announcement later today that it was teaming up with Intel in the health care field.
The venture is expected to involved providing technology to the industry, sources told the Journal. Intel shares also gained about 2.5 percent premarket.
The glimmers of hope in the housing sector were echoed in Europe, where UK house prices eked out a gain for the first time since October 2007, according to March data from a leading UK building society.
Staying in Europe, the European Central Bank disappointed investors by cutting its key policy rate by 25 basis points, rather than the expected 50 bps.
Meanwhile, hopes for a widespread recovery of the global economy rested on global leaders who gathered in London for the G20 summit. President Barack Obama attempted to play down a perceived rift between leaders over plans for further fiscal stimulus.
UK Business Secretary Peter Mandelson told CNBC the UK would be ready for reforms that would see an end to European and American dominance at the helm of the IMF and the World Bank.
The state of the economy is likely to remain in focus as jobless claims for the week ended March 28 are out at 8:30 am New York time and February factory orders are released at 10 am.
Kansas City Federal Reserve President Dr. Thomas Hoenig will speak on recent market developments from Lima in Peru.