U.S. Stock Futures Advance

U.S. Stock Futures Advance; Bank of America, Citigroup Climb

By Adria Cimino

April 9 (Bloomberg) -- U.S. stock futures rose, indicating the Standard & Poor’s 500 Index may trim its first weekly drop in a month, on speculation banks will pass the government’s stress tests and Japan will unveil a $154 billion stimulus plan.

Bank of America Corp. and Citigroup Inc. gained at least 3.7 percent in Europe after the New York Times reported all 19 banks examined to determine their viability if the recession deepens will pass the review. General Motors Corp., the biggest U.S. automaker, climbed 6.7 percent after saying it expects to double annual sales in China.

Futures on the S&P 500 expiring in June added 0.6 percent to 827.6 as of 10:01 a.m. in London. The index has fallen 2.1 percent this week, following four straight weekly gains. Dow Jones Industrial Average futures rose 0.6 percent to 7,838 and Nasdaq-100 Index futures increased 0.6 percent to 1,306.25. European stocks fluctuated, while shares in Asia rallied.

“We’ve had nothing but good news on the financial industry,” said Jacques Porta, a fund manager at Ofi Patrimoine in Paris, which oversees about $615 million. “If the speculation on the stress tests turns out to be true, we certainly will have another rally.”

The S&P 500 has climbed 22 percent since reaching the lowest level in a dozen years on March 9 as banks from Citigroup to JPMorgan Chase & Co. said they made money in the first two months of the year and Treasury Secretary Timothy Geithner unveiled plans to rid financial firms of toxic assets. The index is still down 8.7 percent in 2009 after tumbling 38 percent last year, its worst annual return since the Great Depression.

‘Corrections’

The measure will likely fall to about 780 from last week’s 842.50 close, said JPMorgan’s New York-based strategist Thomas Lee, who cited historical market “corrections” since 1900.

U.S. stocks gained yesterday, snapping a two-day losing streak, as life insurers jumped on prospects of a government bailout and Pulte Homes Inc. agreed to buy Centex Corp. to create the nation’s largest homebuilder.

Japan’s ruling Liberal Democratic Party will propose the government spend about 3 percent of gross domestic product, according to a document obtained by Bloomberg News. Prime Minister Taro Aso’s third package since taking office in September would take total spending to 25 trillion yen ($250 billion).

Europe’s Dow Jones Stoxx 600 Index added 0.2 percent after earlier dropping as much as 0.2 percent. The MSCI Asia Pacific Index rallied 3.2 percent.

Stress Test

Bank of America climbed 3.8 percent to $7.33 in Germany. Citigroup rallied 3.7 percent to $2.80.

Some of the largest lenders may still need additional capital infusions from investors or taxpayers, the New York Times said, citing unidentified officials involved in the research. Regulators may use the findings of the examinations, likely to be completed this month, to push some companies to sell distressed assets, according to the report.

Bank takeovers worsened the financial crisis by making firms that were already too big even bigger, said Nouriel Roubini, the New York University professor who predicted the financial crisis.

“The institutions are insolvent,” Roubini said in a Bloomberg Radio interview. “You have to take them over and you have to split them up into three or four national banks, rather than having a humongous monster that is too big to fail.”

GM jumped 6.7 percent to $2.06 in Germany. The biggest foreign automaker in China said it expects to double annual sales in the country to over 2 million vehicles over the next five years.

China Sales

China’s passenger car sales rose 10 percent in March from a year earlier after tax cuts and government subsidies boosted demand, according to the China Association of Automobile Manufacturers.

Import prices for March and weekly jobless claims are among economic reports scheduled for release today at 8:30 a.m. Washington time.

Profits at S&P 500 companies probably fell 38 percent on average in the first quarter, according to analysts’ estimates compiled by Bloomberg. The stretch of seven straight declines in quarterly earnings is the longest since at least the Great Depression, data compiled by S&P and Bloomberg show.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
Last Updated: April 9, 2009 05:03 EDT