Stocks index futures higher on liquidity injections
Stock index futures are higher in overnight trading as the world’s leading central banks pumped billions of dollars into the global financial system. The Federal Reserve nearly quadrupled the amount of dollars central banks can auction around the world to $247 billion in a coordinated effort to ease the current financial crisis. Financial markets embraced the news by pushing the cost of borrowing in dollars overnight to 3.84 percent from 5.03% Wednesday. It was 2.15% last week.
S&P 500 stock index futures are up 0.75% in overnight trading, adding 8 points as of 8:45 a.m. ET. At one point last night stock futures were up as much as 1.3%, but gains were trimmed after news broke that Morgan Stanley (NYSE:MS) is considering a merger with Wachovia Corp. (NYSE:WB).
The dollar continued its recent decline overnight losing 110 points versus the euro and much smaller amounts against the yen and pound. Crude oil added to yesterday’s gains, climbing $3.80 to $101 on overnight New York Mercantile Exchange trading.
Gold continued to surge in overnight trading adding another $33 to $880. Wednesday gold rose an astounding $70 an ounce or 9% to $847, the biggest percentage one-day gain since September 1999. Investors are being driven to the relative safety of gold as global equities plummet. Gold sales to new clients at Blanchard & Co., the largest U.S. precious-metal retailer, have jumped more than six-fold in the past three days as investors respond to the financial turmoil. “People are looking for answers,” said David Beahm, a vice president at New Orleans-based Blanchard. ”People want to protect their wealth and their assets, and gold is the best way for them to do that.”
This morning’s report on weekly jobless claims showed a rise of 10,000 to 455,000 versus the consensus estimate of a decline to 440,000.
The Russell 2000 (NYSE:IWM) closed Wednesday at 676.38, down 34.24 points or 4.82%. This morning’s opening is expected to push the market up toward 681.00. Support will be found at 668.58, 660.00 and 650.00, the previous bear market low set Jan. 22, 2008. Resistance will emerge at 700 and 720.50.
