Standard & Poor’s 500 Index contracts expiring in December added 0.4 percent to 1,238.8 at 6:46 a.m. in New York, erasing earlier losses of as much as 1.7 percent. Futures on the Dow Jones Industrial Average expiring the same month rose 45 points, or 0.4 percent, to 11,813.
“Markets have pared losses on hopes that a referendum will not occur,” said Ioan Smith, a director at Knight Capital Europe Ltd. in London. “I don’t think the market is too focused on Germany and France pulling aid, the main focus is on the referendum and Greece’s political situation.”
Prime Minister George Papandreou’s ruling Pasok party has split over his pledge to call a referendum on the country’s bailout package before a confidence vote in parliament tomorrow that may determine his survival.
Finance Minister Evangelos Venizelos led lawmakers opposed to Papandreou’s decision to put the package to a vote of the Greek people after German Chancellor Angela Merkel warned that the referendum amounted to a plebiscite on Greece’s membership of the euro. Papandreou is holding a cabinet meeting at midday in Athens, according to a statement from the premier’s office.
The S&P 500 has retreated 3.7 percent so far this week after Greece called a surprise referendum, spurring concern that the country will default. Germany and France said late yesterday they will withhold 8 billion euros ($11 billion) of funding, warning the Greek people that they will lose all European aid if they vote against last week’s bailout package.
Greece’s Referendum
“The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?”Merkel told reporters after crisis talks in Cannes, France. French President Nicolas Sarkozy said Papandreou’s government won’t get a “single cent” of assistance if voters reject the plan. A Group of 20 summit begins in Cannes today.The S&P 500 yesterday rose 1.6 percent after the Federal Reserve said additional purchases of mortgage-backed securities are a “viable option” if the economy requires further easing. The Federal Open Market Committee left the benchmark interest rate unchanged, saying economic growth strengthened while“significant downside risks” remain.
“From a U.S. domestic point of view, things are starting to settle down,” said Nick Skiming a U.S. fund manager at Ashburton Ltd. which oversees about $2 billion in Jersey, theChannel Islands. “But as long as the Greece problem continues, it’s going to infect and impact on all global markets.”
Non-Manufacturing Index
A report due at 10 a.m. New York time may show that U.S. service industries grew at a faster pace in October, indicating the biggest part of the economy is holding up, economists said.The Institute for Supply Management’s non-manufacturing index rose to 53.5 from 53 in September, according to the average economist estimate in Bloomberg News survey. Readings above 50 signal expansion. Other figures today may show a rebound in productivity and a decline in jobless claims.
Tomorrow’s Labor Department release may show U.S. non-farm payrolls increased 95,000 in October, fewer than the 103,000 jobs added in September, according to economists.
