S&P 500 and Dow stock futures rose on Thursday as shares of natural resources companies, including Alcoa Inc, gained after BHP Billiton disclosed it had made a bid for rival miner Rio Tinto.
The BHP bid news, coming a day after Wall Street's suffered its worst slide in three months, helped mitigate investors' unease about credit losses at financial services companies. Comments from Cisco Systems Inc that the credit crisis was hurting the technology sector also added to worry.
We had a minor capitulation yesterday, which should lead to an early bounce in the first couple hours of trading today, said Matt McCall, president of Penn Financial Group in Denver, Colorado.
He said BHP's willingness to pay a premium for Rio and a rise in BHP's stock were bullish signals that demand for commodities was strong.
S&P 500 futures rose 2.7 points and were above fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures rose 41 points, while Nasdaq 100 futures were down 5.75 points.
Among materials companies helped by news of the offer for Rio Tinto were Alcoa, a Dow component, which rose 4.1 percent to $53.30, and U.S. Steel Corp, up 3.2 percent to $102.
In addition, shares of Freeport-McMoRan Copper & Gold jumped 4.8 percent to $113.30 before the opening bell.
Investors also got a boost from an October sales report from warehouse club operator Costco Wholesale Corp, which posted a 9 percent rise in stores open at least a year, beating forecasts.
BHP Billiton's move could create a $350 billion-plus mining giant, but Rio Tinto on Thursday rejected the all-share proposal as too low.
High on Thursday's economic agenda is Federal Reserve Chairman Ben Bernanke's testimony before the congressional Joint Economic Committee at 10 a.m.
His assessment of the likely risks posed by the credit turmoil, surge in crude oil prices and a slide in the dollar will be closely watched for clues about the likely direction of interest rates.
U.S. stocks tumbled on Wednesday and the Nasdaq posted its biggest drop since February amid concerns about the fallout from the credit crisis. The drop wiped out gains since the Fed's September 18 50-basis points interest rate cut.
(Editing by Kenneth Barry)