NEW YORK – Wall Street shook off more signs of global economic troubles Tuesday and headed for a rebound while investors awaited the Federal Reserve's next move on interest rates.
The sharp rise in stock market futures was to be expected given the extreme volatility that has been the hallmark of Wall Street's behavior for more than a month. At the same time, the sometimes light volume of futures contracts trading can make it difficult to determine the market's overall mood. In recent weeks, futures have often moved solidly in one direction, while the broader market showed more moderate moves after the opening bell.
Meanwhile, casualties from the global crisis piled up Tuesday: Whirlpool Corp. said it will cut about 5,000 jobs by the end of 2009, Iceland said it needs $6 billion and Germany said Pakistan must secure a loan from the International Monetary Fund within a week.
Still, a stock market rebound appeared likely early Tuesday after the Dow Jones industrials fell more than 200 points Monday on worries about the economy, giving the blue chips a loss of more than 500 over two sessions. A worldwide rally after huge losses Monday likely helped sentiment early Tuesday.
Dow Jones industrial average futures rose 368, or 4.59 percent, to 8,379. Standard & Poor's 500 index futures gained 39.70, or 4.76 percent, to 874.40, while Nasdaq 100 index futures rose 48.50, or 4.17 percent, to 1,210.50.
Bond prices fell as some investors left the safety of government debt. The yield on the three-month Treasury bill, regarded as the safest investment around and an indicator of investor sentiment, rose to 0.86 percent from 0.77 percent Monday. A higher yield indicates a dip in demand. The yield on the benchmark 10-year Treasury note rose 3.80 percent from 3.69 percent late Monday.
The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose $1.45 to $64.67 in premarket electronic trading on the New York Mercantile Exchange. For much of 2007 the rise in oil often weighed on the stock market but after plunging from its July 11 high of $147.27, analysts have attributed some of the drop to expectations of a global economic slowdown that will hurt demand. So rather than sliding, stocks in the past month have sometimes been given a boost when oil rises.
Investors worldwide snapped up stocks after Monday's rout. Japan's Nikkei stock average jumped 6.41 percent and Hong Kong's Hang Seng index surged 14.4 percent — its biggest gain in 11 years — a day after plunging more than 12 percent. In afternoon trading, Britain's FTSE 100 rose 4.56 percent, Germany's DAX index jumped 8.66 percent, and France's CAC-40 rose 3.15 percent.
The gains come as Fed policymakers plan to convene a regularly scheduled meeting on interest rates. The central bank is expected to lower its fed funds rate by a half-point to 1 percent on Wednesday, a move that could bolster some investors' confidence by making borrowing less expensive.
The disruptions in the normal flow of the credit markets over the past six weeks have produced widespread worries about the economy's ability to avoid a severe downturn. The evaporation in lending is making it difficult and more expensive for businesses and consumers to get loans.
But Monday saw the start of the Fed's efforts to revive lending in the commercial paper market, where companies turn for short-term loans. General Electric Co., for example, has said it would borrow money from the government. The Treasury has also begun to implement part of the government's $700 billion financial bailout plan by investing directly in some banks to give them a much-need source of fresh cash.
The government's extraordinary moves to help support borrowing and restore market confidence come as unease about the economy has buffeted trading, making triple-digit swings in the Dow feel almost commonplace. Some of Wall Street's gyrations since the mid-September bankruptcy filing of Lehman Brothers Holdings Inc. and the subsequent seizing up of the credit markets are tied to massive selling by hedge funds and mutual funds trying to raise cash for nervous investors.
Wall Street is poring over economic and corporate data for clearer insights into how punishing the economy's troubles might be and whether the 45.8 percent decline in the S&P 500 index since its Oct. 9, 2007, peak adequately discounts the fallout from shrinking corporate profits.
The Conference Board is expected to report at 10 a.m. EDT that consumer confidence sank this month as the stock market retreated and fears about the economy grew. Economists, on average, expect the reading to fall to 52 from 59.8 in September, according to a poll by Thomson/IFR.
In corporate news, Whirlpool announced plans to cut about 5,000 jobs by the end of 2009 because tightness in the credit markets and its prediction that demand will continue to slide in North America and Europe. The nation's largest home appliance maker said its profit fell 7 percent in the third quarter as unit volumes fell and material costs increased.
United States Steel Corp. said its third-quarter earnings more than tripled as higher prices led to record gains in its tubular and flat-rolled steel businesses. However, the company expects weaker demand will lower fourth-quarter results.
British oil company BP PLC posted an 83 percent rise in third-quarter profit Tuesday following surging energy prices in the third quarter.
Fallout from credit market troubles popped up around the globe. Iceland's central bank on Tuesday raised its key interest rate by an enormous 6 percentage points to 18 percent. Iceland has seen its currency tumble after its banking sector collapsed this month. The higher rate it designed to make the currency more attractive to foreign investors. Prime minister Geir Haarde said separately on Tuesday that the country will require $4 billion in financial support in addition to the $2 billion loan package announced by the IMF.
Meanwhile, Germany's foreign minister said Tuesday that Pakistan must secure a loan from the IMF within a week to avoid sliding into a financial crisis.