U.S. Stock Futures Advance on Jobs Data; Goldman, Google Rise

By Lynn Thomasson

Jan. 9 (Bloomberg) -- U.S. stock futures rose after a government report showed firings were in line with forecasts last month, spurring speculation that share prices have fallen enough to reflect the recession.

Goldman Sachs Group Inc., Google Inc. and Honeywell International Inc. helped lead gains after the Labor Department said employers cut 524,000 jobs last month, 1,000 fewer than the average projection in a Bloomberg survey.

“It helps everyone breathe a sigh of relief,” said Diane Garnick, who helps oversee $500 billion as an investment strategist at Invesco Ltd. in New York. “The market had priced in the worst-case scenario and with 524,000 it’s a lot better than some of us expected.”

Futures on the S&P 500 added 0.4 percent to 910.1 at 9:13 a.m. in New York, erasing a 0.7 percent retreat. Dow Jones Industrial Average futures climbed 29 points, or 0.3 percent, to 8,725 after sliding 0.6 percent earlier.

The 21 percent rally in the S&P 500 since Nov. 20 reflects speculation the worst of the recession is over, according to Barton Biggs, managing partner at hedge fund Traxis Partners LLC, and Robert Doll, chief investment officer for BlackRock Inc. Equities will probably keep rising, they said on Bloomberg Television.

‘Carries Further’

“Sometime around the middle of the year there’s going to be pretty conclusive evidence that the economy has stabilized,” Biggs said. “That’s what the stock market is now looking forward and seeing, and that’s why I think that this rally carries further.”

The S&P 500 gained yesterday as an advance in energy shares and Citigroup Inc.’s agreement to allow some homeowners to avoid foreclosure offset a worsening earnings outlook for retailers.

Earnings at S&P 500 companies have fallen for five straight quarters, matching the longest streaks of declines on record, and the slump is forecast to continue. According to estimates compiled by Bloomberg, profits probably decreased 12 percent last quarter and will drop 11 percent in the first quarter and 6.2 percent in the following three months before rebounding in the second half of the year. President-elect Barack Obama warned in a speech in Fairfax, Virginia, yesterday that the U.S. risks sinking deeper into an economic crisis without an infusion of government spending and urged Congress to act quickly on his $775 billion stimulus package.

Concern that global stock losses will deepen remains elevated even after falling from record levels in October and November. The Chicago Board of Option Exchange Volatility Index yesterday fell 1.9 percent to 42.56 after climbing 13 percent the previous day. The benchmark index for U.S. stock options had lost more than half of its value since Nov. 20 as stocks rose.

The difference between what the U.S. government and banks pay to borrow for three months, the so-called TED Spread, is still about three times higher than before credit markets started freezing in August 2007, according to data compiled by Bloomberg.

A report scheduled for 10 a.m. Washington time may show wholesale inventories in November fell 0.7 percent, according to a Bloomberg survey of economists.

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.