Citi lower after deal with U.S. government on TARP repayment
By Steve Goldstein, MarketWatch
LONDON (MarketWatch) -- U.S. stock futures rose on Monday as Abu Dhabi came to a $10 billion rescue of ailing Dubai, staving off the potential for a default on a key bond that was due to expire today.
S&P 500 futures rose 6.1 points to 1,109.30 and Nasdaq 100 futures added 10.75 points to 1,802.70. Futures on the Dow Jones Industrial Average added 39 points.
Strong retail-sales data helped push U.S. stocks higher on Friday, with the Dow Jones Industrial Average rising 65 points and the S&P 500 advancing 4 points, though the Nasdaq Composite retreated marginally. Over the week, the S&P 500 advanced a slender 0.04%.
But global stocks advanced after Abu Dhabi lent Dubai the funds necessary to pay off a bond as well as give it breathing space to renegotiate debts on Dubai World. See story.
"This lifeline should dispel the near-term crisis of confidence of the past two weeks and greatly reduces immediate credit risks associated with Dubai World," said analysts at Goldman Sachs in a note to investors.
The Hang Seng rose 0.8% in Hong Kong, and the FTSE 100 climbed 1% in London.
Bonds also rose, with yields on 10-year Treasury notes falling 3 basis points to 3.52%. Dan Greenhaus, chief economic strategist at Miller Tabak, said yields are toward the upper end of its recent trading range.
Platinum and silver futures climbed, though gold futures edged up $2.60 an ounce, and oil futures were trading below $70 a barrel.
The dollar dropped against both the Japanese yen and the euro, with the dollar index falling 0.2%.
Of companies in the spotlight, XTO Energy (XTO 49.25, +7.76, +18.70%) shot up 20% after reaching a deal to be bought by Exxon Mobil (XOM 71.50, -1.33, -1.83%) in a $31 billion all-stock deal. Exxon shares fell 1.8%.
Citigroup (C 3.81, -0.14, -3.54%) reached an agreement with the U.S. Treasury to repay $20 billion of government aid. The New York bank will issue $20.5 billion in securities to pay for the deal, and could issue another $3 billion worth of notes in the first quarter of 2010. Citi slipped 3.2% in pre-market trade.
Banks also will be in focus as the House of Representatives passed legislation that would restrict the operations of large lenders and the power of the Federal Reserve.
Shares of Sun Microsystems (JAVA 9.18, +0.82, +9.81%) climbed 10% in pre-market trade as Oracle (ORCL 22.92, +0.14, +0.62%) said it's had constructive discussions with the European Commission over approval of its deal to buy Sun.
Bid target Cadbury (CBY 51.45, -0.01, -0.02%) raised its sales and margin outlook as the group continued to resist a takeover bid from Kraft Foods (KFT 26.79, +0.11, +0.41%) .
Google (GOOG 596.90, +6.39, +1.08%) is set to market its own phone next year, according to a report in The Wall Street Journal.
