Before the bell: Futures turn higher on jobs report

Posted May 6th 2009 7:37AM by Melly Alazraki
Filed under: Before the Bell, International Markets, Market Matters, Bank of America (BAC), Economic Data, Oil, Financial Crisis

U.S. stock futures drifted lower Wednesday morning, a day ahead of the release of the outcome of the government's stress tests of the leading 19 banks. As investors' anxiety mounted, they woke up to hear Bank of America (NYSE: BAC) may be required raise $30-35 billion in capital.

[Update 9:15: Futures turned higher after optimism about the economy from a better-than-expected jobs report offset concerns about banks.]

Indeed, the latest leak from the government about the stress tests is that Bank of America will be asked to raise $30 billion to $35 billion in new capital. While the bank can sell some assets or convert some preferred shares, no doubt this news will affect shares today, even if the bank could get special treatment from the government as it helped cleanup the mess of Merrill and mortgage lender Countrywide Financial Corp. Already BAC shares declined 9.5% in the latest pre-market trade (7:15 a.m.).

Overseas, world stock markets rose Wednesday as increasing hopes about the economy following better economic and corporate reports outweighed concerns about the outcome of the U.S. government's stress tests.

On the economic front, the pace of mortgage applications filed last week increased a seasonally adjusted 2% from the prior week, Mortgage Bankers Association data show, with a 5% increase in filings for mortgages to buy homes as a 1.2.% increase in applications to refinance existing mortgages. The increases came in spite of higher interest rates charged on fixed- and adjustable-rate mortgages.

Also today, ADP employment report for April will be released at 8:15 AM.

Meanwhile, oil prices rose slightly to just over $54 a barrel, ahead of the weekly report on U.S. oil inventories at 10:30 AM.

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