U.S. stocks are pointing to a higher open Wednesday after China said it will cut reserve requirement ratios for banks.
NEW YORK (TheStreet) -- U.S. stocks were pointing to a higher open Wednesday after China said it will cut reserve requirement ratios for banks in the country.
Futures for the Dow Jones Industrial Average were adding 67 points, or 88 points above fair value, at 11,632, and futures for the S&P 500 were up 8 points, or 10 points above fair value, at 1204. Futures for the Nasdaq were rising 18 points, or 19 points above fair value, at 2231.
China's central bank said Wednesday that it will cut the reserve requirement ratio for lenders by 50 basis points starting Dec. 5. This is the first move of its kind since December 2008 and is expected to help bolster China's economy and increase liquidity as the markets in developed nations continue to be unstable.
The value of global equities has dropped more than $3 trillion in November amid the deepening European debt crisis, according to Bloomberg. Standard & Poor's rating agency has cut by a notch the ratings of big banks ranging from Goldman Sachs(:GS) to Bank of America(:BAC).
The move by China may signal monetary loosening down the road, injecting optimism into the markets about the possibility that this economic powerhouse will once again come to the rescue of the global economy.
German unemployment data for November also lifted market sentiment. Unemployment levels in the eurozone's largest economy have dropped to their lowest since November 1991, down 20,000 to 2.91 million.
These promising developments have for now helped steer some attention away from the shaky details on how European Finance Ministers plan to bolster the European rescue fund, following their meeting in Brussels the previous day. Investors are now looking to the European summit on Dec. 9 for more direction on how European leaders plan to contain the debt crisis amid soaring borrowing costs in Spain and Italy.
London's FTSE 100 was rising 0.91%, and Germany's DAX was gaining 1.61%. In Asia, Japan's Nikkei Average settled down 0.51%, and Hong Kong's Hang Seng index fell 1.46% at the close.
Commodities were heating up on the news out of China. January oil futures were up 30 cents at $100.09, and February gold futures were up $3.60 at $1,722.50.
The benchmark 10-year Treasury was falling 5/32, raising the yield to 2.01%. The U.S. dollar index was trading sideways at $79.026.
Stocks finished mixed Tuesday as the impact of upbeat consumer confidence data and a better-than-expected Italian bond auction was offset by losses in some big tech names.
A number of key U.S. economic metrics will be released Wednesday.
The ADP national employment report on private job sector growth will be published by Macroeconomic Advisers at 8:15 a.m. ET Wednesday. Economists surveyed by Thomson Reuters expect that private sector jobs increased by 130,000 in November, compared with 110,000 in October.
The Institute for Supply Management, Chicago, will release its reading on the Chicago manufacturing sector's economic health at 9:45 a.m. Economists polled by Thomson Reuters see the purchasing managers' index remaining unchanged in November at October's 58.4 level. A reading above 50 indicates expansion in the manufacturing sector.
The National Association of Realtors' pending home sales report for October, which arrives at 10 a.m., will likely show a rise of 1.5% last month, according to economists polled by Thomson Reuters. That compares with a drop of 4.6% in September.
The Federal Reserve will issue its beige book summary of economic conditions in 12 Federal Reserve districts at 2 p.m.
-- Written by Andrea Tse in New York.