Stock futures rose on Tuesday as reassuring comments from Citigroup
According to Chief Executive Vikram Pandit's memo obtained by Reuters, Citigroup was profitable in the first two months of 2009 and is confident about its capital strength after tough internal stress tests.
Shares of Citigroup, which recently had the government take a large common equity stake as part of a rescue plan, jumped 18 percent to $1.24 before the bell, while shares of Bank of America
We are looking at a nice open, if things stay the way they are, said Peter Cardillo, chief market economist at Avalon Partners in New York. There's a little bit of a break in the negative rhetoric that we've been having out of Washington.
The market was interpreting the Citi news as a positive, added Cardillo. The Financial Select Sector SPDR
Sentiment was also buoyed by comments from U.S. Treasury Secretary Timothy Geithner to Reuters late on Monday that the United States has taken more action in recent weeks to tackle its economic problems than other countries have done in years.
S&P 500 futures rose 13.10 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 117 points, and Nasdaq 100 futures added 17.75 points.
Also bolstering optimism on the financial sector were comments by Sheila Bair, head of the Federal Deposit Insurance Corp, that the government's plan to strip banks of money-losing assets would restore confidence in the banking system. She said this in an interview in Tuesday's Washington Post.
But even with the likely bounce at the open, the market's biggest test will be whether it can sustain the possible advance throughout the session as investors look for catalysts to lift the market off 12-year lows.
Tuesday's agenda includes Federal Reserve Chairman Ben Bernanke speech on financial reform to address systemic risk before the Council of Foreign Relations in Washington at 8:30 a.m. EDT.
U.S. stocks fell in choppy trade and the Nasdaq slid to a fresh 6-1/2-year low on Monday on caution about the economy's outlook and about Merck's
(Reporting by Ellis Mnyandu)