Stocks looked set to jump 2 percent at the open on Thursday after European leaders agreed to boost the region's bailout fund and struck a deal with banks and insurers to accept 50 percent losses on Greek bonds.
S&P futures indicated a rise of 2.5 percent at the open, with the broad index likely to break out of its recent trading range at around 1,230-1,250. Investors have been waiting on the sidelines with cash for weeks as uncertainties over Europe persisted.
S&P 500 futures rose 34.4 points and were far above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures soared 258 points, and Nasdaq 100 futures jumped 56.25 points.
European shares rose 4 percent and hit a 12-week high after the Europe deal, led by banking shares.
Reached after more than eight hours of hard-nosed talks between European heads of state and the International Monetary Fund and bankers, the deal also foresees a recapitalization of hard-hit European lenders and a leveraging of the bloc's rescue fund to give it firepower of 1.0 trillion euros ($1.4 trillion).
There has been a lot of pessimism building up overall over the last year and it has been this European overhang. One of the things we've been saying is you need something to move people off the sidelines or from a technical perspective, you would have to see some major improvement, for a solid move on the S&P, said Todd Salamone, director of research at Schaeffer's Investment Research in Cincinnati, Ohio.
The latest data showed U.S. economic growth increased at its fastest in a year in the third quarter, expanding 2.5 percent as consumers and businesses set aside fears about the recovery and stepped up spending. Also, new U.S. claims for unemployment benefits fell modestly last week.
September U.S. pending home sales come at 10 a.m. EDT and are seen rising 0.1 percent from a fall of 1.2 percent in the previous reading.
In an early earnings report, Exxon Mobil Corp's
Dow Chemical Co
Research in Motion Ltd
(Reporting by Angela Moon; editing by Jeffrey Benkoe)