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Stock Futures Soar After Dismal Week

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Stock-index futures posted steep gains on Monday morning on the heels of the blue chips' worst week since the 2008 financial crisis amid cautious optimism European policymakers were gearing up to tackle the region's deepening debt crisis. 

Today's Markets

As of 9:15 a.m. ET, Dow Jones Industrial Average futures jumped 109 points to 10,806, S&P 500 futures gained 14.5 points to 1,144 and Nasdaq 100 futures climbed 15 points to 2,222. 

Wall Street was in selloff mode last week: the Dow plummeted 738 points, or 6.4%, while the broader S&P 500 shed 6.5%.  The flight from risky assets wasn't limited to equities, as oil and gold prices plummeted nearly 10%, while the yield on the benchmark 10-year Treasury note hit historical lows repeatedly. 

With stock futures pointing to triple-digit gains for the blue chips at the opening bell on Monday, this week is so far shaping up to be more upbeat.  Traders were reacting to a slew of developments on Europe's sovereign debt crisis -- which was a major contributor to last week's rout. 

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European Central Bank Governing Council member Ewald Nowotny suggested Monday that a rate cut by the region's central bank shouldn't be ruled out, according to a report by Reuters.  The generally inflation-hawkish ECB halted its rate cuts at its September meeting only five months after starting to hike rate amid increasing economic headwinds. 

There were also reports over the weekend regarding additional measures to make it easier to euro zone countries like Greece to access funding, which has been struggling with a nearly $500 billion public debt load and has received enormous bailouts from the European Union and International Monetary Fund.  The country, analysts say, is likely to default on its debt if it doesn't receive the next round of rescue aid next month.  The increased likelihood of a default has made it more expensive for other highly-indebted euro zone countries like Italy, Spain and Portugal to access funding in the private markets, sparking fears of the debt crisis could escalate significantly should Greece default. 

In particular, policymakers are said to be in discussions about strengthening the so-called European Financial Stability Facility, which was set up in 2010 to help ease the pressures of the debt crisis. 

Still, many market participants remained wary of policymakers' ability, or inclination, to further enhance the size of rescue funds. 

'Dysfunctional Policy Performances'

"Euro area politicians and policymakers are still behind the curve in tackling the debt problems comprehensively enough to successfully contain or even reverse contagion," analysts at Barclays Capital wrote in a note to clients. "This overall policy uncertainty is not only not helpful, it is also damaging market confidence." 

In fact, economists at Deutsche Bank blamed "dysfunctional policy performances" in the U.S. and Europe as main contributors to damaging the U.S. economy, particularly, in hurting Americans' wealth and confidence.  The German-based investment bank also warned that if "policy uncertainty intensifies further ... a recession could still ensue."

The economic calendar is fairly light on Monday, with a report on new home sales on tap for 10:00 a.m. ET.  Sales of new homes are expected to have dipped 1% in August to 295,000.  The new home industry has been under continued pressure as a result of weak lending conditions, high supply, and generally depressed prices across the country. 

With little data on tap, Monday's session may be another volatile ride, according to Ben Critchley, sales trader at IG Index, a London-based trading firm. 

In currencies, the euro climbed 0.1% against the U.S. dollar, while the greenback slumped 0.64% against a basket of world currencies. 

Energy markets were in the green.  Light, sweet crude gained 54 cents, or 0.69%, to $80.39 a barrel.  Wholesale RBOB gasoline gained 3 cents, or 1.1%, to $2.58 a gallon. 

Gold slipped $6.60, or 0.41%, to $1,633 a troy ounce.  The yield on the 10-year Treasury rose 1.857% from 1.839%. 

Corporate News

Netflix (NFLX) struck a deal with Dreamworks Animation (DWA) to stream first-run movies and television specials from the studio behind "Shrek" and "Madagascar." Shares were sharply higher on the news. 

Berkshire Hathaway unveiled plans to buy back class A and B shares at no more than a 10% premium, sending shares soaring. 

Boeing (BA) signed a final contract to provide the first long-awaited Boeing 787 Dreamliner. 

McGraw-Hill (MHP) warned shareholders that the Securities and Exchange Commission is considering punishing the company’s Standard & Poor’s unit due to its handling of a 2007 security that imploded.

Foreign Markets 

The English FTSE 100 climbed 1.4% to 5,140 and the German DAX soared 3.7% to 5,387. 

In Asia, the Japanese Nikkei 225 slumped 2.2% to 8,374 and the Chinese Hang Seng dropped 1.5% to 17,408. 

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