Shares of Ford were up 7 percent at $8.58 before the bell after senior company executives said the automaker was on track to post its first monthly sales increase in two years.

In banking news, Barclays PLC reported an 8 percent rise in half-year profit, while HSBC Holdings PLC said its first-half profit halved from a year ago, but the results were better than the analyst consensus forecast.

“The greatest difficulty has been in financials, so the gains in HSBC and Barclays (are) adding to optimism and (suggest) that the worst may be over,” said Andre Bakhos, president of Princeton Financial Group, in New Brunswick, New Jersey.

“It’s comforting to see that we are in a global rebound in earnings.”

The Select Sector SPDR Financial ETF was up 2.2 percent before the bell.

A rise in oil prices was also poised to underpin the broader market, with U.S. front-month crude up 2.4 percent, or $1.65, to $71.10 a barrel.

S&P 500 futures rose 10 points and were 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 climbed 74 points, and Nasdaq 100 futures were 17.00 points higher.

The rise in U.S. stock index futures suggested that indexes will open up about 1 percent or more. The benchmark S&P 500 <.SPX> could begin trading at a 9-month high, very close to the psychologically important 1,000 level, after registering its best five-month winning streak since 1938 on Friday.

In Europe stocks were up more than 1 percent.

3M Co shares rose 2.4 percent to $72.22 before the bell after Goldman Sachs upgraded the Dow component to “buy” from “neutral.”

Ford, due to report its July sales later in the day, is among the primary beneficiaries of the federal government’s “Cash for Clunkers” incentive program that took effect on July 24.

The Senate on Monday is due to vote on extending the program to stimulate auto sales after the U.S. House approved $2 billion for it on top of an initial $1 billion in June.

The economic calendar includes the Institute for Supply Management’s manufacturing index due at 10 a.m. (1400 GMT). A Reuters poll of economists forecast a July reading of 46.2 from 44.8 in June.

NEW YORK, Aug 3 (Reuters)

U.S stocks headed for a higher open on Wednesday as news the White House and congressional Democrats reached an agreement in principle to aid U.S. automakers. including General Motors , calmed investors’ worries.

But signs of further deterioration in the world economy and the profit outlook, including big job losses at an global mining company, fueled caution a day after stocks sell-off ended two straight days’ of gains.

Without government help. investors fear that a possible failure or bankruptcy in the auto sector could send shock waves through the economy and worsen unemployment.

Backers of the $15 billion proposal for bailing out U.S. automakers could come to a vote in the House as early as Wednesday, officials said.

“Investors have been concerned about the continued acceleration of the market free-falling with significant bad news events,” said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

But news of the auto agreement should spur “more of a relief rally than the feeling that this is something good for the markets itself.”

S&P 500 futures were 10.90 points higher and were 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 climbed 84 points, and Nasdaq 100 futures gained 10 points.

Shares of GM were up 3.8 percent to $4.88 in premarket trade and Ford gained 3.7 percent to $3.35.

Also likely to lend support to the market was a rebound in oil prices, which could boost energy shares. U.S front-month crude was up 4 percent to $43.96 barrel.

Earnings news and outlooks continued to cast a pall. Shares of Eastman Kodak tumbled nearly 16 percent to $6 before the bell after the photography company warned 2008 revenue and profit will fall short of expectations.

Video game publisher Electronic Arts shares fell 10 percent to $17.40 in premarket trade a day after the company cut its outlook.

Stocks in Asia rose overnight, sending the Hang Seng index up nearly 6 percent, as investors bet on stimulus measures from Beijing. Hopes for a U.S. auto deal also contributed to the gains, but European shares edged lower.

Global miner Rio Tinto said it planned to cut 14,000 jobs and reduce capital expenditures by $4 billion in 2009. Chinese imports and exports unexpectedly fell in November, which underscored the breadth and the depth the global slump.

Year-to-date the S&P 500 is off 39.5 percent but has gained 18 percent since hitting a Nov. 21 low. From its October 2007 record high, the index is off about 43 percent.

Chuck Mikolajczak
NEW YORK, Dec 10 (Reuters)

– U.S. stock futures are pointing higher this morning ahead of a widely anticipated cut in key lending rates by the Fed. Futures traders expects the Fed to bring rates down a half-point to 1%. “S&P 500 futures climbed 32.4 points to 867.10 and Nasdaq 100 futures rose 44 points to 1,206.00. Dow industrial futures rose 300 points,” according to MarketWatch.

– Traders across the globe appear to have snapped out of their funk also. Japan’s Nikkei index is up 7%, Hong Kong’s Hang Seng is up 14%, and London’s FTSE is up 2% as of 5:40AM EDT.

– Gold is up in London this morning as stocks rally. So far this month, traders have knocked 14% off the price of gold as they sold assets to raise cash. “Gold for immediate delivery gained $14.92, or 2 percent, to $745.72 an ounce as of 8:56 a.m. in London,” according to Bloomberg.

– Oil edged up toward $64 this morning. The black goo is also tracking the recovery in European and Asian stock markets.

– “U.S. 10-year Treasuries fell the most in almost three weeks as stocks rallied and the U.S. government prepared a record $34 billion note sale to help pay for bank rescues,” reports Bloomberg.

– Don Boudreaux at the Cafe Hayek blog heaps more misery on the head of former Fed head Alan Greenspan by way of a letter to the WSJ. Well put, Don…

To the Editor:

Alan Greenspan now blames deregulation for today’s financial turmoil (”Greenspan Admits Error to Hostile House Panel,” October 24).  Whatever deregulation there was, and whatever its merits or demerits, there is one crucial financial instrument – dollars – that throughout was supplied by an utterly unjustifiable state monopoly – the Fed.  Unfortunately, this decidedly unfree-market arrangement draws little attention.

Skepticism is advisable when the former head of a government-created and protected monopoly blames the market for using that monopoly’s output unwisely.  Would the demand for mortgage-backed securities have been as frothy as it was if Mr. Greenspan’s Fed had not created so much new money?  Would the demand for owner-occupied housing itself have been so intense?  Because money plays a common and vital role in all of these transactions – and because Mr. Greenspan’s Fed kept pumping dollars into the economy with no way to know what the ‘correct’ supply is – you’ll pardon my inability to give credence to Mr. Greenspan’s latest pronouncements.

Sincerely,
Donald J. Boudreaux

– Friday’s improvement in U.S. existing home sales data is no doubt having a positive effect on the markets. New home sales were up 2.7% from their 17-year low in September. The question is: Will the uptrend hold? This from Rob Parenteau, the new editor of the Richebacher Letter, as quoted in The 5. Min Forecast.

We have to wonder whether this [improvement in housing] will hold in the months ahead. Layoffs are mounting across many industries and the prospect of further foreclosures weighing on the market must be rising.

Initial unemployment claims are pushing through the prior two recession highs. As personal income growth slows, household debt servicing is bound to become even more problematic, barring a much lower mortgage rate environment.

While the money markets seizing up was the clear-and-present danger, the attempt to reel in mortgage rates must be the next policy priority. Beyond that, perhaps with a stabilization in the equity market from oversold conditions, value players may start to arbitrage corporate bond yields in. Without this type of sequencing, a lower fed funds rate does not mean much beyond some possible psychological relief for equity investors.

Refi activity remains well below its peak rate level back in February, and the longer it takes to get mortgage rates down, the more homeowners will be unable to refi as home values fall below mortgage loan values. Surprisingly, bank real estate loan activity has not fallen off a cliff, although that is mostly because households are still tapping home equity lines of credit, while mortgage loans for purchases have gone flat.

U.S. stock futures pointed to another monumental beating on Friday – with leading contracts falling as much as rules allow — as a plunge in Asia reignited concerns about the health of the global economy.

S&P 500 futures dropped 60 points to 855.20 and Nasdaq 100 futures fell 85 points to 1,168.50. Dow industrial futures fell 550 points.

All three contracts fell so much that they reached pre-specified limits that can’t be broken until pit trading opens.

Thursday’s session for U.S. stocks was erratic but generally positive, with the Dow Jones Industrial Average closing 172 points higher and the S&P 500 rising 11 points, though the Nasdaq Composite slipped 11 points.

Read on at MarketWatch.

The losses among banks, insurers and money managers may spark the next round of writedowns on CDOs after $660 billion in subprime-related losses. They may force lenders to post more reserves against losses after governments worldwide announced $3 trillion in financial-industry rescue packages since last month, according to Barclays Capital.

– Meanwhile, Reuters reports that U.S. banks will need more $700 billion in government cash injections to stay afloat because “banks cannot predict how many of their loans will sour because they do not know how much the economy will shrink, and forecasts of their future losses would only spook investors.”

– The numbers are certainly worrying:

By the numbers, the outlook for banks is troubling. U.S. commercial banks had about $1 trillion of capital as of the end of the second quarter.

That may sound like a lot, but Alpert estimates that banks globally could have a total of $1.25 trillion to $1.5 trillion of writedowns and losses from mortgages, of which perhaps $600 billion have already been recorded.

– Earnings season is upon us. Investors are reacting to the prospect of corporate losses. This from MarketWatch:

U.S. stock futures pointed to a second straight drop on Wednesday on concerns for earnings in a rocky economy, though Apple looked set to buck the trend after the consumer electronics giant was able to sell far more iPhones than expected.

S&P 500 futures fell 20.1 points to 939.20 and Dow industrial futures tumbled 166 points. Futures on the tech-concentrated Nasdaq 100 fell a more modest 15.5 points to 1,277.00.

– Global stock indexes also fell. This from Bloomberg:

The MSCI World Index lost 2.9 percent to 944.07 at 12:02 p.m. in London. The index has lost 40 percent this year and oil has tumbled more than 50 percent from its peak in July as concern deepened government bailouts to save the global banking system won’t avert a recession.

– In the currency markets, the British pound hit a five-year low against the dollar. The euro plumbed a 20-month low against the buck.

– Crude oil prices fell below $70 a barrel on growing fears of a global economic slowdown. OPEC’s scheduled meeting on Friday to discuss output cuts has so far failed to stem oil’s slide.

– A lot of investors are calling a bottom — at least a tentative bottom — in stocks.

– Addison Wiggan and Ian Mathias in The 5 Min. Forecast note that Jeremy Grantham, self-proclaimed “perma-bear” is turning bullish.

Grantham says the time has come for “hesitant and careful buying” of equities. Grantham, who also correctly called a global bubble among all asset classes last year, told his $120 billion worth of clients that this is the quarter to start buying.

“On Oct. 10, we can say that, with the S&P at 900, stocks are cheap in the U.S. and cheaper still overseas. We will, therefore, be steady buyers at these prices. Not necessarily rapid buyers — in fact, probably not — but steady buyers…

“History warns, though, that new lows are more likely than not.

“Fixed income has wide areas of very attractive, aberrant pricing. The dollar and the yen look OK for now, but the pound does not. Don’t worry at all about inflation. We can all save up our worries there for a couple of years from now and then really worry!

“Commodities may have big rallies, but the fundamentals of the next 18 months should wear them down to new two-year lows. As for us in asset allocation, we have made our choice: hesitant and careful buying at these prices and lower.”