By Nikolaj Gammeltoft and Joanna Ossinger - Oct 10, 2011 6:41 PM GMT+0700
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Angela Merkel, Germany's chancellor, right, and Nicolas Sarkozy, France's president. Photographer: Michele Tantussi/Bloomberg
Oct. 10 (Bloomberg) -- Jonathan Golub, chief U.S. market strategist at UBS Securities LLC, talks about the outlook for U.S. stocks, corporate earnings and Europe's debt crisis. Golub speaks with Matt Miller and Carol Massar on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
U.S. stock futures gained, indicating the Standard & Poor’s 500 Index will extend last week’s rally, after German Chancellor Angela Merkel said European leaders will do “everything necessary” to ensure that banks have adequate capital.
Financial shares may move after Bank of America Corp. (BAC) and Morgan Stanley (MS) rose in early New York trading. General Electric Co. (GE), the world’s third-biggest supplier of wind turbines, increased 1.5 percent in Germany. Microchip Technology Inc. (MCHP), the maker of programmable semiconductors, jumped 2.5 percent.
S&P 500 futures expiring in December advanced 15.8, or 1.4 percent, to 1,170.70 at 7:22 a.m. New York time. Contracts on the Dow Jones Industrial Average rose 138, or 1.3 percent to 11,204.
Merkel joined French President Nicolas Sarkozy to persuade investors they can stamp out the debt crisis roiling global markets. At a joint press conference in Berlin, Sarkozy set a Nov. 3 deadline to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance.
“We are focusing on major U.S. equities now, looking past the European stock markets because there’s too much volatility there,” Tim Hartzell, who oversees about $350 million as chief investment officer for Houston-based Sequent Asset Management, said in a telephone interview. “The Fed is still accommodative and we’re entering into an election year, when politicians are usually pulling various levers to make the economy grow.”
Weekly Gain
U.S. stocks rose 2.1 percent last week, breaking a two-week losing streak and driving the S&P 500 up from the brink of a bear market, amid optimism European leaders will tame the region’s debt crisis and after American economic data improved. The stock index surged 6 percent between Oct. 3 and Oct. 6, the biggest three-day rally since August.
The U.S. may have dodged a recession for now, even though it’s too early to sound the all-clear for the economy. A string of stronger-than-projected statistics -- capped by the news on Oct. 7 that payrolls increased by 103,000 last month -- has prompted economists at Goldman Sachs Group Inc. (GS) and Macroeconomic Advisers LLC to raise their forecasts for third- quarter growth to 2.5 percent from about 2 percent. That’s nearly double the second quarter’s 1.3 percent rate and will be the fastest growth in a year.
Bank of America rose 2.9 percent to $6.07, while Morgan Stanley gained 1 percent to $14.38. Goldman Sachs Group Inc. increased 0.3 percent to $93 in German trading.
General Electric Gains
General Electric gained 1.5 percent to $15.74 in German trading after it announced its first investment in Indian renewable energy generation. GE Energy Financial Services will build wind farms with Greenko Group Plc for $115 million. The deal expands GE’s $6 billion portfolio of global clean-energy investment into a country that added the most new wind capacity last year after China and the U.S.
Microchip Technology climbed 2.5 percent to $34.52 in German trading after Barron’s said the shares may rise to $40 as the company continues to profit and pay dividends amid difficult economic conditions.
Netflix Inc. (NFLX), the online and mail-order video service, gained 2.2 percent to $119.75 after Tony Wible, an analyst at Janney Montgomery Scott LLC, raised the stock to “neutral” from “sell.”
AT&T Inc. (T), the second-largest U.S. wireless operator, increased 2.5 percent to $29.15 after saying it received more than 200,000 preorders for the iPhone 4S in 12 hours, marking the company’s most successful debut yet for the Apple Inc. (AAPL) device. Apple rose 1.5 percent to $375.23 in early New York trading.
Google Inc. (GOOG), owner of the world’s most popular search engine, climbed 1.8 percent to $524.22 after the Wall Street Journal reported the company remains in the bidding Hulu after Yahoo! dropped out.
To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Joanna Ossinger in New York at jossinger@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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