By Rita Nazareth - Dec 29, 2011 8:52 PM GMT+0700
U.S. stock futures rose, after yesterday’s slump, as concern about Europe’s debt crisis eased after Italian borrowing costs declined at an auction.
Yahoo (YHOO)! Inc., the U.S. Web portal exploring strategic options after firing Chief Executive Officer Carol Bartz, rallied 1.4 percent. Bank of America Corp. (BAC) added 0.7 percent, following a two-day drop. Newmont Mining Corp. (NEM) retreated 0.7 percent as extended gains in the U.S. dollar heightened speculation of slowing demand for precious metals. Mosaic Co. (MOS) slumped 4 percent on plans to cut output.
Standard & Poor’s 500 Index futures expiring in March rose 0.3 percent to 1,248.20 at 8:51 a.m. New York time. The benchmark gauge yesterday erased its 2011 gain and fell below its average price of the past 200 days (SPX). Dow Jones Industrial Average futures added 27 points, or 0.2 percent, to 12,108.
“What will continue to drive the market is the situation in Europe,” said Louis de Fels, a Paris-based money manager at Raymond James Asset Management International, which oversees $30 billion worldwide. “We could have a bit of a gain, but volume is low. Investors are cautious.”
Since 1986 (SPX), the S&P 500 has gained an average 0.3 percent on the second-to-last trading day of the year, according to data compiled by Bespoke Investment Group. On the last trading day, the index has fallen 0.2 percent on average, the data showed. The measure was down 0.6 percent this year (SPX) through yesterday, poised to snap a two-year rally.
Italian Auction
Stock futures rose as Italy auctioned 7.02 billion euros ($9 billion) of bonds, falling short of the target, as borrowing costs declined in its final debt sale of the year. Italian Prime Minister Mario Monti said a package of measures that aim to spur growth will be ready before a meeting of European finance ministers on January 23. He said his government will first focus on making Italy’s debt sustainable and doesn’t “rule out” more aggressive efforts to reduce existing debt.
Fewer Americans filed applications for unemployment benefits over the past month than at any time in the past three years, a sign the U.S. labor market is on the mend heading into the new year. Still, applications (INJCJC) rose for the first time in a month during the week ended Dec. 24, climbing by a more-than- forecast 15,000 to 381,000.
Yahoo (YHOO) was among the highlights within the biggest American companies today. The shares rose 1.4 percent to $16. Bank of America, which dropped 5.6 percent over the previous (BAC) two days, gained 0.7 percent to $5.32.
Chesapeake Energy Corp. (CHK) rose 0.8 percent to $22.84. The most active U.S. oil and natural-gas driller agreed to sell a pipeline subsidiary to an affiliated partnership for $865 million.
Gold Producers
Gold producers (NEM) fell as the metal sank today. Gold is still poised to complete its 11th consecutive annual gain, the longest winning streak in at least nine decades, on the brink of a bear market. Newmont Mining, the largest U.S. gold producer, retreated 0.7 percent to $59.
Mosaic sank 4 percent to $48.30. The world’s largest producer of phosphate fertilizer said it will cut output by as much as 250,000 metric tons through the first quarter of 2012.
Trading of a new class of contracts that expire a week after they’re listed pushed U.S. options volume to a ninth- straight annual record as investors turned to shorter maturities to hedge risk.
About 4.5 billion contracts changed hands through Dec. 27, beating last year by 16 percent, according to data from Chicago- based OCC, which clears and settles equity derivatives. Weekly equity options, which didn’t exist before last year, accounted for 9.3 percent of industry volume for options tied to stocks and exchange-traded funds this year through November, Steve Crutchfield, chief executive officer of NYSE Amex Options, said in a telephone interview Dec. 22.
Exclusive License
One-week contracts on individual equities began trading in June 2010 when NYSE Amex, an exchange owned by NYSE Euronext (NYX), listed them on the PowerShares QQQ Trust (QQQQ), SPDR S&P 500 ETF Trust (SPY), SPDR Dow Jones Industrial Average ETF Trust (DIA) and iShares Russell 2000 Index Fund. CBOE Holdings Inc. (CBOE)’s Chicago Board Options Exchange began short-dated options on the Standard & Poor’s 500 Index (SPX) and other benchmark gauges in 2005. Those trade only on the CBOE because of an exclusive license, while weekly options on equities can trade on all nine U.S. exchanges.
“They took off much quicker than we expected,” Randy Frederick, the Austin, Texas-based director of trading and derivatives for Charles Schwab Corp., said in a phone interview Dec. 21. The firm has $1.68 trillion in 8.5 million client accounts. “A good portion of the growth in weeklys has been in the retail segment. It has definitely contributed to volume.”
To contact the reporter on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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