U.S. Stock-Index Futures Rally as Abu Dhabi Bails Out Dubai

By Adam Haigh

Dec. 14 (Bloomberg) -- U.S. stock-index futures rose, indicating the Standard & Poor’s 500 Index is poised for a fourth day of gains, after Abu Dhabi provided $10 billion to Dubai to help with debt repayments.

JPMorgan Chase & Co. and Bank of America Corp. both gained more than 1 percent after Abu Dhabi agreed to provide funds to Dubai’s Nakheel PJSC. Exxon Mobil Corp. climbed 1.1 percent after Societe Generale SA advised buying the shares.

Futures on the Standard & Poor’s 500 Index expiring in March rose 0.5 percent to 1,109.2 at 9:38 a.m. in London. Dow Jones Industrial Average futures gained 0.5 percent to 10,472. Nasdaq-100 Index futures added 0.6 percent to 1,802.75.

“The prospect of a default has diminished as a result,” said Stephen Pope, chief global equity strategist at Cantor Fitzgerald in London. “I am sure Abu Dhabi realized that to stand aside could lead to a starvation of foreign direct investment into the Gulf region.”

Abu Dhabi’s pledge will allow Dubai World’s Nakheel real- estate unit to make $4.1 billion of payments on bonds that mature today. Markets tumbled last month as Dubai said it was starting talks with its lenders to restructure debt accumulated during the emirate’s six-year real-estate boom.

The S&P 500 has rebounded 64 percent from a 12-year low in March after manufacturing and consumer spending increased and the U.S. government lent, spent or guaranteed more than $11 trillion to end the recession. The Wall Street strategists who correctly predicted U.S. equities would rebound from the steepest plunge since the Great Depression now say the S&P 500 will rally 11 percent next year.

S&P 500 in 2010

Thomas Lee, the chief U.S. equity strategist at JPMorgan Chase & Co., and Goldman Sachs Group Inc.’s David Kostin, this year’s most-accurate forecasters, say Federal Reserve interest rates near zero and profit growth of more than 26 percent will drive the S&P 500 to 1,300 and 1,250, respectively, in 2010. The combination of higher earnings and an increase in mergers and acquisitions will boost the index to 1,250, according to Thomas Doerflinger, a senior strategist at UBS AG in New York.

JPMorgan added 1.3 percent to $41.51 and Bank of America climbed 1.7 percent to $15.90 in Germany.

Exxon Mobil, the largest U.S. oil company, gained 1.1 percent to $73.63. Societe Generale raised its recommendation on the shares to “buy” from “hold,” saying the company may post the “strongest” production growth of the oil majors in 2010.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.