U.S. Stock-Index Futures Climb on Stress Tests; Citigroup Gains

By Daniela Silberstein

May 8 (Bloomberg) -- U.S. stock futures climbed, indicating the Standard & Poor’s 500 Index will extend its second straight week of gains, after the Federal Reserve Chairman Ben S. Bernanke said results of the bank stress test “should provide considerable comfort.”

Citigroup Inc. and Bank of America Corp. rallied at least 9 percent in pre-market trading in New York. Ten lenders need $74.6 billion in new capital, a result Bernanke said should reassure investors about the soundness of the financial system. Alcoa Inc., the largest U.S. aluminum producer, and Exxon Mobile Corp. rose in Europe with higher metal and crude oil prices. Investors will also watch a report that may show employers cut fewer jobs last month as signs emerged the worst of the recession had passed.

Futures on the Standard & Poor’s 500 Index expiring in June added 1 percent to 916.40 as of 11:03 a.m. in London. Dow Jones Industrial Average futures increased 0.9 percent to 8,459. Nasdaq-100 Index futures rose 0.5 percent to 1,401.75. European and Asian shares also climbed.

“The market is looking at the glass half full and is glad that the stress test is over,” said Rudolf Buxtorf, who manages about $114 million at RBS Coutts Bank in Zurich. “Sooner or later the situation had to improve and investors are more positive on the future. We had overstretched the bow to the downside.”

The S&P 500 yesterday dropped from a four-month high before the stress-test results as financial, telephone and technology companies retreated. The measure, which has risen 34 percent from a 12-year low in March, this week erased its loss for 2009 as reports on home sales and manufacturing in China boosted confidence the global recession is easing.

Citigroup Gains

Citigroup climbed 12 percent to $4.28 in New York after the Fed said it needs $5.5 billion in additional capital. Bank of America, determined to require $33.9 billion, gained 9 percent to $14.80. Fifth Third Bancorp, Ohio’s largest lender, soared 19 percent to $6.37 as the central bank said it must raise $1.1 billion.

JPMorgan Chase & Co. climbed 4.3 percent to $36.77 in pre- market trading in New York, while Goldman Sachs Group Inc. gained 2.7 percent to $137.36 in Germany. The two banks passed stress tests without needing fresh capital.

Analyst at UBS AG upgraded U.S. commercial bank stocks to “overweight” from “underweight” after the government’s review of the industry.

Alcoa added 2 percent to $10.05 in German trading. Copper rose in London, heading for a second straight weekly advance, amid speculation demand will rebound. Aluminum, zinc and nickel also gained.

Economy Watch

Exxon, the world’s largest oil company, increased 1.2 percent to $69.72. Crude oil rose for a third day in New York, poised for the biggest weekly gain since March, on signs the economy may be starting to recover.

Payrolls fell by 600,000 after a 663,000 drop in March, according to the median estimate of 70 economists in a Bloomberg News survey. The unemployment rate still jumped to a 25-year high of 8.9 percent last month, the survey showed. The Labor Department report is due at 8:30 a.m. in Washington.

Another report scheduled for 10 a.m. may show wholesale inventories in March dropped 1 percent, following a 1.5 percent decline in the prior month, according to a Bloomberg survey of economists.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.