Futures Gain on Hopes of EU Bailout Deal
Futures rallied Thursday after a new bailout fund document stated it will extend loans to ease the euro zone debt crisis and as investors largely shrugged off a disappointing jobless claims news.
In Europe, France and Germany struck an agreement on a second bailout for Greece late on Wednesday ahead of a summit of EU leaders.
The euro zone bailout fund, the EFSF, will provide loans to Greece, Ireland and Portugal at a lower interest rate and for longer maturities, according to draft summit conclusions seen by Reuters.
Loans from the European Financial Stability Facility will be extended from 7.5 years to at least 15 years and the interest rate will be lowered from around 4.5 percent currently, in the case of reece and Portugal, to around 3.5 percent, the draft document said.
On the economic front, weekly jobless claims rose more than expected last week, according to the Labor Department, pointing to a employment market that is struggling to regain momentum.
Initial claims for unemployment benefits increased 10,000 to a seasonally adjusted 418,000. Economists polled by Reuters had forecast claims rising to 410,000. The prior weeks figure was revised up to 408,000 from the previously reported 405,000.
Futures were pressured earlier following a weak manufacturing datafrom China, which renewed concerns that growth is slowing in the world’s second-largest economy.
On the earnings front, AT&T posted a higher-than-expected revenue increase, as customer growth improved even as the mobile service provider lost exclusive U.S. rights to sell Apple's iPhone.
PepsiCo reported higher earnings, thanks to an increase in the firm's snack sales and its acquisition of a Russian beverage company.
Nokia also posted a better-than-expected quarterly profitafter the world's largest phone maker was able to settle a patent dispute with Apple.
Meanwhile, Morgan Stanley reported a quarterly loss that was smaller than forecastsand revenue that beat expectations.
However, Travelers swung to a loss, as the property insurer suffered more than $1 billion in catastrophe losses because of record-breaking tornadoes in April and May.
Microsoft and AMD are slated to report earnings after-the-bell tonight.
On the M&A front, Express Scripts has agreed to buy rival Medco Health Solutions for $29.1 billion, combining two of the largest U.S. pharmacy benefit managers.
The Philadelphia Fed survey is released at 10 am ET, as are June leading indicators and the FHFA home price index.
Fed Chairman Ben Bernanke, Securities and Exchange Commission Chair Mary Schapiro, CFTC Chairman Gary Gensler and Acting FDIC Chair Martin Gruenberg are testifying at a hearing on the Dodd Frank bill at 10 am ET, a year after the financial reform legislation was adopted.
President Barack Obama and top lawmakers face growing pressure to find an agreement on raising the US debt ceiling.
Charles Plosser, president of the Philadelphia Federal Reserve Bank, told Reuters in an interview Wedneday that the US central bank has for the past few months been working closely with Treasury to decide what to do if the world's biggest economy runs out of cash on August 2.
Coming Up This Week:
THURSDAY: Leading indicators, Philadelphia Fed survey, money supply, Bernanke speaks; Earnings from Mircrosoft, AMD and SanDisk
FRIDAY: No major econ. news expected; Earnings from Caterpillar, GE, McDonald's, Schlumberger, Verizon, Honeywell
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