US futures advance with S&P 500, Dow Jones at all time highs

US stock-index futures rose, indicating equities may extend all-time highs after a fifth week of gains, as confidence in the global economy grew amid support from central banks.

Futures on the Standard and Poor’s 500 Index expiring in December added 0.3 percent to 2,067.5 at 8:50 a.m. in New York.

Dow Jones Industrial Average contracts increased 42 points, or 0.2 per cent, to 17,822 today. The underlying index closed at a record last week.

“The US economy is very solid, and we’re also starting to see signs that the worst is behind us for Europe,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “Investors are starting to position for a global recovery in the first half of next year. It’s a combination of more optimism about global growth and very accommodative policy, as stimulus picks up in Japan, China and Europe.”

The S&P 500 advanced 1.2 per cent last week as data signaled the US economy is improving, European Central Bank President Mario Draghi pledged to raise inflation as fast as possible and China unexpectedly cut interest rates.

The SandP 500 has rebounded 11 per cent from a six-month low last month. The gauge had plunged as much as 7.4 per cent as concern grew Europe was leading a global growth slowdown. Futures extended gains today after a report showed German business confidence unexpectedly advanced this month.

The rally in American equities has pushed stock valuations to the highest since the end of 2009. The SandP 500 trades at 17.2 times the projected earnings of its members, up from a multiple of 15.5 last month. Profit for S&P 500 companies may rise 7.6 per cent this year, estimates compiled by Bloomberg show.

Economic reports

In Germany, the Ifo institute's business climate index rose to 104.7 in November from 103.2 in October. Economists had predicted a decline in the gauge that is based on a survey of 7,000 executives. Preliminary data from Markit Economics at 9:45 a.m. New York time will show the US services industries expanded at a faster pace this month, economists forecast. Reports tomorrow may show the world's largest economy grew at a slower rate in the third quarter than first estimated, while consumer confidence probably climbed in November to a seven-year high.

Bloomberg