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Stocks point higher as global shares jump

Stocks point higher as global shares jump

U.S. stocks appeared headed for a rebound Tuesday as investors awaited the start of a two-day meeting of the Federal Reserve that is widely expected to bring another reduction in interest rates.
The sharp rise in stock market futures contracts Tuesday was to be expected given the extreme volatility that has been the hallmark of Wall Street's behavior for more than a month. At the same time, the sometimes light volume of futures trading can make it difficult to determine the market's overall mood. In recent weeks, stock futures have moved solidly in one direction, while actual trading was more moderate after the opening bell.
A higher open would come as casualties from the global crisis piled up Tuesday: Whirlpool Corp. said it will cut about 5,000 jobs by the end of 2009, Iceland said it needs $6 billion and Germany said Pakistan must secure a loan from the International Monetary Fund within a week.
Still, a stock market rebound appeared likely early Tuesday after the Dow Jones industrials fell more than 200 points Monday on worries about the economy, giving the blue chips a loss of more than 500 over two sessions. A worldwide rally after huge losses Monday likely helped sentiment early Tuesday.
Dow Jones industrial average futures rose 338, or 4.22 percent, to 8,349. Standard & Poor's 500 index futures gained 37.00, or 4.43 percent, to 871.70, while Nasdaq 100 index futures rose 51.50, or 4.43 percent, to 1,213.50.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose 3.80 percent from 3.69 percent late Monday. The yield on the three-month Treasury bill, regarded as the safest investment around and an indicator of investor sentiment, rose to 0.85 percent from 0.77 percent Monday. A higher yield indicates a dip in demand.
The dollar was mixed against other major currencies.
Investors worldwide snapped up stocks after Monday's rout. Japan's Nikkei stock average jumped 6.41 percent and Hong Kong's Hang Seng index surged 14.4 percent _ its biggest gain in 11 years _ a day after plunging more than 12 percent. In morning trading, Britain's FTSE 100 rose 3.18 percent, Germany's DAX index jumped 8.14 percent, and France's CAC-40 rose 2.67 percent.
The moves come as Fed policymakers plan to convene a regularly scheduled meeting on interest rates. The central bank is expected to lower its fed funds rate by a half-point to 1 percent on Wednesday, a move that could bolster some investors' confidence by making borrowing more attractive.
The disruptions in the normal flow of the credit markets over the past six weeks have produced widespread worries about the economy's ability to avoid a severe downturn given. The evaporation in lending is making it difficult and more expensive for businesses and consumers to borrow money.
But Monday saw the start of the Fed's efforts to revive lending in the commercial paper market, where companies turn for short-term loans. General Electric Co., for example, has agreed to borrow money from the Fed.
Uncertainty about the economy likely will continue to buffet trading. Some of Wall Street's gyrations since the mid-September bankruptcy filing of Lehman Brothers Holdings Inc. and the subsequent seizing up of the world's credit markets are tied to massive selling by hedge funds and mutual funds trying to raise cash for nervous investors.
Investors also examined mixed corporate news. British oil company BP PLC posted an 83 percent rise in third-quarter profit Tuesday following surging energy prices between July and September.
Whirlpool announced plans to cut about 5,000 jobs by the end of 2009 because tightness in the credit markets and its prediction that demand will continue to slide in North America and Europe. The nation's largest home appliance maker said its profit fell 7 percent in the third quarter as unit volumes fell and material costs increased.
Fallout from credit market troubles emerged elsewhere: Iceland's central bank on Tuesday raised its key interest rate by an enormous 6 percentage points to 18 percent. Iceland has seen its currency tumble in recent weeks after its banking sector collapsed in October. The higher rate it designed to make the currency more attractive to foreign investors. Prime minister Geir Haarde said separately on Tuesday that the country will require $4 billion in financial support in addition to the $2 billion loan package announced by the IMF.
Meanwhile, Germany's foreign minister said Tuesday that Pakistan must secure a loan from the IMF within a week to avoid sliding into a financial crisis.
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Updated : 2021-03-04 01:37 GMT+08:00