Stock Futures Rally Amid Optimism Over Euro Summit
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Stock-index futures zoomed higher on Friday amid hopes that European policymakers are making headway toward reaching an agreement to tackle the region's sovereign debt crisis ahead a key summit this weekend.
As of 9:00 a.m. ET, Dow Jones Industrial Average futures jumped 114 points to 11,586, S&P 500 futures climbed 13 points to 1,223 and Nasdaq 100 futures gained 23 points to 2,324.
In a sign of the volatility on Wall Street recently, the blue chips have flipped between gains and losses on a daily basis for 10-straight sessions, the longest such streak since 2009. Headlines from Europe have been driving the markets, as traders have fretted that the debt and financial crises will spread from the periphery to the core, potentially causing a threat to major global economies.
Germany and France -- Europe's economic superpowers -- conceded late Thursday that a solution will not be finalized at this weekend's summit, but one would be announced no later than the following Wednesday. Olli Rehn, the EU's economic and monetary commissioner, said early Friday that he is hopeful policymakers will make progress. Additionally, Reuters reported that un-named German sources said several options are on the table for leveraging the region's bailout fund. While utilizing leverage would give the fund considerably more power, it has been contentious among German officials.
This comes as the international community, including the U.S., has turned up the heat on EU officials to stem the crisis before it does more damage to global economies. The markets have added pressure too, with the spread between European safe-haven bonds, the German bund, and other sovereign debt widening markedly this month, meaning investors are demanding higher yields to hold the relatively riskier sovereign debt. This makes it more expensive for countries to borrow, and creates a feedback loop that worsens the crisis.
Additionally, Standard & Poor's said France could lose its top-notch AAA credit rating in the event of a sharp economic downturn, according to so-called stress tests the ratings firm performed.
European traders shrugged off news on France, and remained optimistic that officials will be able to draft a solution by next week. Indeed, euro-zone blue chips leaped nearly 2%, and the euro rose 0.3% to $1.38. The dollar fell 0.14% against a basket of world currencies.
A heavy earnings week comes to a close today. Nearly half of Dow components, and more than 20% of the S&P 500 will have reported by the end of the day.
General Electric (NYSE:GE), the biggest U.S. conglomerate, said its earnings jumped 18% to 31 cents a share in the third quarter, excluding one-time charges, meeting analysts' expectations. Verizon Communications (NYSE:VZ) posted continuing profits of 56 cents a share, topping estimates of 55 cents.
There are no major economic releases on tap for Wednesday.
Energy markets were higher. Light, sweet crude gained $1.19, or 1.3%, to $87.22 a barrel. Wholesale RBOB gasoline rose 1 cent, or 0.19%, to $2.67 a gallon.
Metals were sharply to the upside. Gold jumped $20.40, or 1.3%, to $1,633 a troy ounce. Silver soared 69 cents, or 2.3%, to $30.97 a troy ounce.
The yield on U.S. government debt continued nudging higher on Friday. The benchmark 10-year note yields 2.207% from 2.194%.
The Euro Stoxx 50 soared 1.9% to 2,314, the English FTSE 100 rose 1.3% to 4,546 and the German DAX surged 2% to 5,883.
In Asia, the Japanese Nikkei 225 slipped 0.04% to 8,678 and the Chinese Hang Seng rose 0.24% to 18,026.