RTRS: US STOCKS-Futures up on Wachovia deal, jobs data looms
By Ellis Mnyandu
NEW YORK, Oct 3 (Reuters) - U.S. stock index futures rose on Friday after news Wells Fargo (WFC.N: Quote, Profile, Research, Stock Buzz) has agreed to acquire embattled bank Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) for $15 billion, but optimism was tempered by caution about jobs data and bailout legislation heading for a vote in the House of Representatives.
The deal between Wells-Fargo, one of the strongest U.S. banks left, and Wachovia scuppered a previously announced deal for Citigroup (C.N: Quote, Profile, Research, Stock Buzz) to buy parts of Wachovia.
The global lending market remained strained by tight lending conditions and investors fretted about the fate of the proposed $700 billion bailout bill for the financial sector due for a House vote later today.
To get the latest reading on the U.S. economy, investors planned to scrutinize the Labor Department's release on changes in non-farm payrolls and the unemployment rate in September due at 8:30 a.m. (1230 GMT).
The Wachovia acquisition is "a big positive from the perspective of the private sector because it shows it's dealing with its current issues," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
"I see it differently than the Citi deal because Citi needed government help, while Wells Fargo is able to do this without a stitch of government help. It is a big bank with big deposits and that gives it stable costs."
S&P 500 futures SPc1 rose 6.40 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 climbed 55 points and Nasdaq 100 NDc1 futures gained 10.50 points.
Shares of Wachovia jumped 64 percent to $6.42 before the bell, but shares of Citigroup declined 8 percent to $20.69.
The planned Wachovia-Wells Fargo tie up would end a previously announced deal in which Citigroup was to buy banking operations of Wachovia in a deal supervised by the Federal Deposit Insurance Corp. (FDIC) that included assistance from the government.
Anxiety surrounded the fate of the government's rescue plan for banks, which the Senate passed on Wednesday after the House rejected it in its original form on Monday.
Democratic House Speaker Nancy Pelosi said she would not schedule the floor debate until she thought there were enough votes to pass the bill. (Additional reporting by Steven C Johnson; Editing by Kenneth Barry)