U.S. Stock Futures Climb in Sign of Rally

By Sarah Jones - Sep 28, 2011 7:53 PM GMT+0700
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A trader signals an order in the Volatility Index Options pit on the floor of the Chicago Board Options Exchange in Chicago, Illinois. Photographer: Tim Boyle/Bloomberg

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Sept. 28 (Bloomberg) -- Andrew Milligan, head of global strategy at Standard Life Investments Ltd., talks about U.S. and European equities. He speaks from Edinburgh with Francine Lacqua on Bloomberg Television's "The Pulse." (Source: Bloomberg)

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Sep. 28 (Bloomberg) -- Michael Purves, chief market strategist and head of derivatives research at BGC Financial LP, talks about the outlook for the U.S. dollar, stocks, and Treasuries. Purves speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

U.S. stock futures rose, indicating the Standard & Poor’s 500 Index may extend the biggest three-day advance in a month, amid mounting speculation policy makers will contain Europe’s debt crisis.

Caterpillar Inc. and Amazon.com Inc. increased at least 0.6 percent, pacing advanced among the largest U.S. companies. Bank of America Corp. climbed 0.6 percent, leading gains among financial companies.

S&P 500 futures expiring in December advanced 0.3 percent to 1,173.30 at 8:50 a.m. New York time, after earlier rising as much as 1 percent. Dow Jones Industrial Average futures gained 38 points, or 0.3 percent, to 11,158 today.

“This is classic trading range action,” Liam Dalton, president of Axiom Capital Management Inc. in New York, which oversees $1.4 billion, said in a telephone interview. “We’re shifting emotions between fear and greed until we get some resolution as to the European situation. This market is struggling to have any continuity.”

The S&P 500 rallied 4.1 over the previous three days, paring its loss this quarter to 11 percent. Stocks are having the worst quarter on record relative to Treasuries and gold, which may force investors to buy equities to rebalance their allocations, JPMorgan’s Marko Kolanovic said last week.

$1 Trillion

A four-day rout last week erased $1 trillion from U.S. equities amid concern Greek insolvency is inevitable and Europe can’t contain the damage. The decline left the S&P 500 trading at 12.4 times earnings in the past 12 months, 4.4 percent below its average valuation at the lowest point during the last nine bear markets, Bloomberg data shows.

Futures on the VIX show investors expect the Chicago Board Options Exchange Volatility Index to remain at least 50 percent above its historical average of 20.5 through May, data compiled by Bloomberg show.

Stocks rallied yesterday after Greece made progress in meeting requirements for more international aid and Germany vowed continue to support for the country. Equities trimmed gains in the final hour after the Financial Times reported that some euro-area countries are demanding that private creditors take bigger writedowns on their Greek bond holdings.

European Commission President Jose Barroso today called for faster creation of a rescue fund and said he will press ahead with common bonds for the euro area, a proposal Germany opposes. Experts from the European Commission, European Central Bank and International Monetary Fund will return to Athens tomorrow to review the Greek government’s budget-cut plans, the commission said.

Stock futures briefly extended gains after a report showed orders for U.S. capital goods climbed in August by the most in three months, a sign business investment continues to support the recovery. Bookings for goods like computers and communications gear, excluding military hardware and aircraft, climbed 1.1 percent, the most since May, the Commerce Department report showed. Demand for total durable goods dropped 0.1 percent, less than forecast.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net