U.S. Index Futures Gain Amid Optimism on Federal Reserve Support

New York (Dec 22)  U.S. stock-index futures climbed, after equities posted their biggest weekly gain since October, amid investor optimism that the Federal Reserve will continue to support the economy.

Futures on the Standard & Poor’s 500 (SPX) expiring this month added 0.2 percent to 2,071.8 at 7:28 a.m. in New York, after earlier rising as much as 0.4 percent. A rebound in energy shares sent the equity gauge up 3.4 percent last week, closing 0.2 percent from a record. Dow Jones Industrial Average contracts gained 49 points, or 0.3 percent, to 17,810, today. Futures on the Russell 2000 Index added 0.3 percent.

U.S. equities jumped 5 percent in the past three sessions, as Chair Janet Yellen said the central bank will likely hold key rates near zero at least through the first quarter, even as the U.S. economy strengthens. The gauge erased its loss for the month and closed 5 points below a record of 2,075.37 reached Dec. 5. The S&P 500 has advanced in each of the past six Decembers.

Data today will show existing-home sales in the U.S. slipped to 5.20 million in November from 5.26 million in October, according to economists’ forecasts.

Even as stocks rebounded, JPMorgan Chase & Co. and Bank of America Corp. have warned that equity volatility is picking up and upheavals will become more common next year. Three weeks into December, the Chicago Board Options Exchange Volatility Index has already risen 99 percent and fallen 30 percent.

It’s the second time in two months that the gauge of trader anxiety known as the VIX jumped above 20, only to erase more than half its gain within three days. Bouts of volatility are likely to plague investors more in 2015 as the Fed gets closer to raising interest rates, according to strategists from the banks.

Cubist Gains

Cubist Pharmaceuticals rose 2.1 percent in premarket New York trading. The drugmaker that is being taken over by Merck & Co. said that the U.S. Food and Drug Administration approved its Zerbaxa antibiotic for the treatment of urinary-tract and abdominal infections.

Gilead Sciences Inc. slid 6.4 percent. Express Scripts Holding Co., which manages prescriptions for U.S. insurance plans, will make AbbVie Inc.’s hepatitis C drug available to all patients with the nation’s most common form of the disease, while excluding Gilead’s Sovaldi and Harvoni treatments from Jan. 1 for most patients.

Source: Bloomberg