Monday, March 16, 2009

U.S. stock futures point to rally's extension

LONDON (MarketWatch) - U.S. stock futures climbed on Monday, as hopes for the financial system continued to fuel markets with Federal Reserve Chairman Ben Bernanke again pledging not to allow a repeat of Lehman Brothers. S&P 500 futures rose 10.3 points to 764.90 and Nasdaq 100 futures added 11 points to 1,179.00. Dow industrial futures rose 81 points.

Led by news that Citigroup was profitable during the first two months of the year and a spate of merger activity in the pharmaceutical sector, U.S. stocks had a strong week, with the S&P 500 charging 10% higher after four weeks of losses.Banks led markets in Europe and Asia higher on Monday, with the Nikkei 225 up 1.8% in Tokyo and the FTSE 100 up 2% in London.

Bernanke said in an interview on 60 Minutes the first sitting Fed chairman to conduct a television interview in 20 years that the U.S. recession will probably come to an end this year, though the nation's 8.1% unemployment rate will continue to rise."The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis," Bernanke said said. "Lehman proved that you cannot let a large internationally active firm fail in the middle of a financial crisis." A G-20 meeting of the world's top finance ministers and central bankers over the weekend produced a pledge to restore growth and boost the International Monetary Fund's resources.

The U.S., meanwhile, is going to attempt to toughen financial market oversight, by giving the Federal Reserve new powers that include heightened capital requirements for banks and the authority to take over a large financial firm that is failing, The Wall Street Journal reported, citing people familiar with the matter.

Oil futures took a hit, down nearly 5% to $44.16 a barrel after the Organization of Petroleum Exporting Countries opted not to cut production quotas over the weekend. OPEC said they would focus instead on compliance with earlier cuts.

"We suspect that this downward move will linger for most of the week, as the markets will surely conclude that there is now less 'insurance' in the system should demand take a turn for the worst, or alternatively, if cartel members step up their cheating, which thus far, has been kept to a respectable minimum," said analysts from MF Global. Monday's docket includes the Empire State index for March, Treasury inflows for January, industrial production for February and the NAHB housing market index for March.

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