Stock Futures Climb on Fed Debt Relief News

Updated from 7:00 a.m. EDT

Premarket futures were suggesting U.S. stocks would rebound from Monday's pummeling, after the Federal Reserve said it would buy short-term debt from U.S. companies to provide relief from the credit crisis.

The Fed announced creation of a new lending facility to buy short-term commercial paper from businesses. The Fed said it expects the new lending program to remove the stoppage in the credit markets.

Futures for the S&P 500 were up 8.9 points at 1062 and were 1.5 points above fair value. Nasdaq futures were up 21 points at 1427 and were 5.7 points ahead of fair value.

On Monday, the major indices sold off frantically only to recover from much of their losses as the credit crisis manifested itself outside the U.S. The Dow Jones Industrial Average, down as much as 800 points during the session, ended with a loss of 369 points, or 3.6%. Nasdaq and the S&P 500 finished down 3.9% and 4.3%, respectively.

After Monday's close, Bank of America (BAC) announced it would cut its dividend and raise $10 billion in fresh capital as it reported quarterly earnings ahead of schedule.

Meanwhile, Citigroup (C) and Wells Fargo (WFC) agreed to take a two-day breather from their legal fight over who would get to acquire Wachovia (WB).

In the technology sector, chipmaker Advanced Micro Devices (AMD) announced a plan to spin off its manufacturing operations.

Automaker Adam Opel, a segment of General Motors (GM), said it would cease production at its Eisenach, Germany plant, according to the AP.