US stock futures jump on Fed commercial paper facility

Tue, Oct 7 2008, 13:37 GMT
http://www.afxnews.com

NEW YORK, Oct 7 (Reuters) - U.S. stock index futures rose on Tuesday, indicating Wall Street will recover at the open, after the U.S. Federal Reserve announced the creation of a

commercial paper funding facility.

Commercial paper is widely used to fund day-to-day business operations by corporations and other institutions.

S&P 500 futures rose 18 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

111 points and Nasdaq 100 futures gained 21.25 points.

The interbank overnight and three-month costs to borrow dollars shot up earlier on Tuesday, indicating the continued lack of confidence and that banks were hoarding cash.

Investors will hear from Federal Reserve Chairman Ben Bernanke, who speaks to a business group at 1:15 p.m. (1715 GMT).

In Monday's trading U.S. stocks cut almost half of their losses in the final hour of the session as traders speculated the sell-off may trigger a coordinated global response to thaw credit markets. Much of the speculation centered around the possibility of rate cuts.

(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)

((Ellis.Mnyandu@thomsonreuters.com; +1 646 223 6085; Reuters

Messaging:ellis.mnyandu.reuters.com@reuters.net))

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Ellis Mnyandu

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