By Saumya Vaishampayan
U.S. stock futures surged Friday after China's central bank cut
interest rates and the European Central Bank's president reiterated
that the institution was ready to expand its stimulus program.
Dow Jones Industrial Average futures jumped 134 points, or 0.8%,
to 17829. S&P 500 futures advanced 16 points, or 0.8%, to 2068
and Nasdaq-100 futures gained 32 points, or 0.8%, to 4277. Changes
in stock futures don't always accurately predict moves in the stock
market after the opening bell.
Futures were bolstered by indications that stimulus actions by
global central banks will continue to support stock gains. European
shares also rallied.
China's central bank cut lending rates for the first time in
more than two years, a surprise move that ramped up its efforts to
bolster flagging growth. China has an annual growth target of about
7.5%, and expectations are building that it could miss that target.
The People's Bank of China on Friday cut its benchmark one-year
loan rate by 0.4 percentage point to 5.6%, the first cut since July
2012.
European Central Bank President Mario Draghi said the central
bank was ready to fight dangerously low inflation by expanding its
asset-purchase programs. The Stoxx Europe 600 jumped 1.6% while the
euro dropped to $1.2435.
"The combination of Chinese and European stimulus has certainly
put a bid in European markets and appears to be doing the same
here," said Art Hogan, chief market strategist at brokerage firm
Wunderlich Securities.
U.S. stock-market gains in recent years have been credited with
the Federal Reserve's unprecedented stimulus, creating a supportive
environment for financial assets such as stocks. While the Fed has
ended its bond-purchase program and is considering an interest-rate
increase, other central banks are expanding stimulus efforts as
they battle slowing growth. The Bank of Japan last month
unexpectedly added to its stimulus measures, prompting a rally in
global stocks.
On Thursday, the Dow industrials and S&P 500 closed at
records, boosted by a rise in oil prices. The news of Chinese
stimulus suggested that Chinese demand for crude oil could
increase, further boosting prices, said Mr. Hogan. Crude-oil
futures surged 2.3% to $77.62 a barrel.
"That's a good sign because one of the...drags on the market has
been the pullback in energy prices," he said.
Gold futures rose 0.8% to $1200.60 an ounce. The yield on the
10-year Treasury note inched up to 2.343% from 2.335% on
Thursday.
In corporate news, Valeant Pharmaceuticals Inc. is launching a
$2 billion securities buyback program, which will begin Friday. The
company recently lost its bid to buy Allergan Inc.
Ross Stores Inc. shares rose 6.7%. The discount retailer's
third-quarter profit rose, with per-share earnings beating its own
projections. Same-store sales rose 4%, also topping the company's
forecast.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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