US equity markets were stronger after Goldman Sachs said it believed the S&P 500 would enjoy its best second-half rally since 1982.
The investment bank boosted its forecast for the US benchmark index, predicting a 15 per cent jump from its closing level 919.32 on June 30, to 1,060 on December 31.
“Improvement in ex-financial earnings per share, stabilisation in profit margins and higher forward EPS guidance all point to a rising market through 2009,” said David Kostin at Goldman.
Meanwhile, markets were stronger after troubled lender CIT Group appeared to have secured financing and avoid bankruptcy.
Investors were awaiting an official announcement from the bank which lends to small and medium sized businesses, but it was reported that bondholders would supply it with $3bn in emergency funding.
”After a weekend where anything seemed possible for the firm – including Chapter 11 – it now has some breathing space to sort out its balance sheet and develop a viable business plan,” said Manoj Ladwa at ETX Capital.
Shares in CIT Group were up 91 per cent by late morning to $1.35.
Fears that a failure of CIT would lead to a renewed bout of risk aversion led to a lacklustre performance from the major indices on Friday. Nevertheless, the Dow Jones Industrial Average was up 7.3 per cent on the week, while the S&P 500 rose 7 per cent, thanks to a number of stronger-than-expected earnings reports including those from Goldman Sachs, JPMorgan and Intel.
On Monday, the Dow Jones Industrial Average was up 0.5 per cent to 8,783.01, while the S&P 500 added 0.4 per cent to 943.88.
Shares of Yahoo, the internet company, eased 0.5 per cent to $16.76 after brokers at Jefferies & Co raised their price target to $20 from $19, saying the company’s long term prospects were good, particularly if it managed to strike a long-hoped for deal with software group Microsoft.
Johnson Controls was hit by the downturn in car manufacturing as the auto parts maker reported a 63 per cent drop in its third-quarter earnings. However, its profit of 25 cents a share was better than forecasts of 19 cents a share, and the stock jumped 5.3 per cent to $22.61.
Human Genome Sciences rocketed 207 per cent higher to $10.19 after it said its experimental treatment for lupus had been a success in late-stage trials.
Texas Instruments, the chipmaker, was among the companies reporting quarterly earnings on Monday. Ahead of its post-closing bell results the company’s shares were up 1.1 per cent to $23.27.
