U.S. stock-index futures advanced, signaling the market may extend its biggest two-day rally since 1987, after the Federal Reserve committed as much as $800 billion to help resuscitate lending.
SLM Corp., the student lender known as Sallie Mae, rallied 14 percent, while CIT Group Inc., a commercial-finance company, jumped 11 percent after the Fed said the funds will be used to purchase mortgage-related debt and support loans to consumers and small businesses. Citigroup Inc. advanced 7.1 percent after its chief financial officer said the bank has no need to sell assets in order to conserve capital.
Futures on the Standard & Poor’s 500 Index expiring in December gained 2.5 percent to 869.1 at 9:11 a.m. in New York. Dow Jones Industrial Average futures rose 162, or 1.9 percent, to 8,547 and Nasdaq-100 Index futures jumped 1.6 percent to 1,164.75.
“This is a more direct effort, as opposed to shoring up the balance sheets of key banks,” said Erick Maronak, the New York-based chief investment officer at Victory Capital Management, which oversees $61 billion. “Hopefully that alone will restore confidence and get things moving again.”
The S&P 500 has rallied 13 percent from an 11-year low on Nov. 20 after the government guaranteed troubled assets at Citigroup and President-elect Barack Obama picked Fed Bank of New York chief Tim Geithner as his Treasury secretary.
JPMorgan climbed 5.2 percent to $29 in trading before the official open of U.S. exchanges, while Bank of America Corp. added 2.9 percent to $15.01.
General Electric, the economic bellwether whose products range from lightbulbs to power-plant turbines, rose 1.3 percent to $15.46. Intel Corp., the world’s biggest maker of semiconductors, added 10 cents to $13.66.
Citigroup Gains
Citigroup, the New York-based bank that got $306 billion of loan guarantees from the government over the weekend, advanced 42 cents to $6.37. CFO Gary Crittenden said in a Bloomberg Television interview that there is “no need for us to sell assets at this point, although we’ll continue to work away on non-strategic assets.”
Futures maintained gains even after the Commerce Department said the U.S. economy shrank in the third quarter faster than previously estimated as consumer spending plunged by the most in almost three decades. Gross domestic product contracted at a 0.5 percent annual pace from July through September, the most since the 2001 recession, according to revised. The government’s advance estimate issued last month showed a 0.3 percent decline.
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