US stock futures surge on plan for mortgage giants

[September 08, 2008]  NEW YORK (AP) -- U.S. stock futures pointed to a huge rally Monday as investors rushed to lay bets on a broad economic recovery following the weekend announcement that the U.S. government plans to bail out mortgage lenders Fannie Mae and Freddie Mac. U.S. stock futures jumped more than 2 percent.

Meanwhile, bond prices fell sharply as emboldened investors looked for riskier but higher-yielding bets.

The weekend announcement that the Treasury Department was seizing control of the companies, which own or back about half the nation's mortgage debt, in an instant brushed aside persistent worries that the companies would be felled by a spike in bad mortgage debt.

The plan to guarantee the debt of government-chartered mortgage giants could not only help lower mortgage rates but, some investors are hoping, buoy the overall economy.

Dow Jones industrial average futures surged 273, or 2.43 percent, to 11,500. Standard & Poor's 500 index futures rose 36.80, or 2.97 percent, to 1,277.90. And Nasdaq composite index futures rose 37.50, or 2.12 percent, to 1,807.50. Stocks finished last week with steep losses amid worries about the overall economy and the financial sector.

Bond prices pulled back sharply Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3.81 percent from 3.69 percent late Friday. The dollar was higher against other major currencies, while gold prices rose.

Light, sweet crude rose 62 cents to $106.85 in premarket electronic trading on the New York Mercantile Exchange.

The U.S. government's plan touched off a global stock rally Monday. Japan's Nikkei stock average jumped 3.4 percent and Hong Kong's Hang Seng index surged 4.3 percent. In morning trading, Britain's FTSE 100 jumped 3.81 percent, Germany's DAX index rose 3.21 percent, and France's CAC-40 surged 4.44 percent.

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On the Net:

New York Stock Exchange: http://www.nyse.com/

Nasdaq Stock Market: http://www.nasdaq.com/

[Associated Press; By TIM PARADIS]

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