Wednesday, December 10, 2008

U.S. Stock Futures Gain; General Motors, Ford Climb in Europe

By Adria Cimino

Dec. 10 (Bloomberg) -- U.S. stock-index futures rose on speculation lawmakers will approve a $15 billion bailout to keep automakers afloat, the government’s latest effort to boost the economy. Asian shares climbed, while Europe’s Dow Jones Stoxx 600 Index was little changed.

General Motors Corp., the biggest U.S. carmaker, and Ford Motor Co. gained more than 2 percent in Germany. Democrats reached a tentative agreement with the Bush administration that calls for the appointment of a so-called car czar who could force GM and Chrysler LLC into Chapter 11 bankruptcy if the companies don’t come up with a restructuring plan by March 31, according to a senior Bush administration official who requested anonymity.

The Standard & Poor’s 500 Index this week marked a technical end to a 14-month bear market as President-elect Barack Obama stepped up efforts to pull the economy out of a recession, pledging the biggest public-works spending since the 1950s. The index has lost 43 percent from its 2007 record as the collapse of subprime mortgages curbed earnings for five straight quarters.

“Strong and radical measures by the government lead us to believe that the economy won’t be as difficult as we thought,” Guillaume Duchesne, a Geneva-based equity strategist at Fortis Private Banking, which oversees about $117 billion, said in a Bloomberg television interview. “It gives the market hope.”

S&P 500 futures expiring in December added 1.5 percent to 902.4 at 12:25 p.m. in London. Dow Jones Industrial Average futures rose 1.4 percent to 8,840. Nasdaq-100 Index futures increased 1.4 percent to 1,234.5.

Rallies by Honda Motor Co. and Hyundai Motor Co. helped send the MSCI Asia Pacific Index up 3.3 percent. Europe’s Stoxx 600 added 0.1 percent as Rio Tinto Group surged on plans to eliminate 14,000 jobs and cut capital spending by more than half.

GM, Ford

GM jumped 4.9 percent to $4.93. Ford advanced 2.2 percent to $3.30. Congress will vote as early as today on the plan.

A report scheduled for 10 a.m. Washington time may show wholesale inventories in October fell 0.2 percent, according to a Bloomberg survey of economists. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan is set for release at 7 a.m.

Electronic Arts Inc. lost 8.1 percent to $17.78. The world’s second-largest maker of video games predicted fiscal 2009 revenue and profit will be lower than previously forecast because of slow holiday sales in North America and Europe. The company said it will reduce costs by making fewer games and increasing job cuts.

Praxair, Nike

Praxair Inc., the largest producer of industrial gases in the Americas, reduced its fourth-quarter profit forecast and said it will cut 1,600 jobs because the recession is causing an “unprecedented” drop in demand. The shares didn’t trade in Europe.

Nike Inc., the world’s largest athletic-shoe maker, was downgraded to “neutral” from “buy” at Bank of America Corp., which cited a slowdown in demand. The stock didn’t trade in Europe.

The 497 companies in the S&P 500 that reported third-quarter results saw an average 18.3 percent decline in profits, prompting analysts to cut estimates for next year. They now project profit growth of 8.2 percent for S&P 500 companies in 2009, about one- third of their forecast of 23 percent at the end of the third quarter, according to data compiled by Bloomberg.

The biggest slump in U.S. consumer spending since 1942 will extend the recession and push the jobless rate to the highest level in a quarter century, according to economists surveyed by Bloomberg News.

Household spending will drop 1 percent in 2009, the biggest decline since after the attack on Pearl Harbor, according to the median estimate of 51 economists surveyed Dec. 4 through Dec. 9. By the middle of next year, the economy will have shrunk for a record four consecutive quarters, the survey showed.

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