Stock Futures Sink Ahead of Opening
03/13/2008
NEW YORK (AP) - Wall Street headed for a sharply lower opening Thursday, following the example of markets around the world as the dollar continued its descent and worries about the U.S. economy reasserted themselves.
Ahead of the opening in the U.S., Dow futures were down 153 points, or 1.3 percent, at 11,971, while Standard & Poor's 500 futures were down 17.80, or 1.4 percent, at 1,291.60 and Nasdaq 100 futures fell 22.25, or 1.3 percent, to 1,712.50.
Markets in Asia and Europe took their cues from the performance of U.S. markets Wednesday, when Wall Street gave up its euphoria over a central bank plan to bail out the credit markets. The Dow Jones industrial average closed with a moderate loss Wednesday following its 416-point gain on Tuesday, but the decline was clearly a signal from U.S. investors that they were no longer so sure the Federal Reserve plan to pump $200 billion into credit markets would fix the many problems in the U.S. economy.
Meanwhile Thursday, the dollar hit a 12-year low against the Japanese yen and also fell to another new low against the euro, which reached $1.56 for the first time. And oil prices, whose relentless ascent have fed inflation worries, continued to rise.
Light, sweet crude rose 35 cents to $110.27 per barrel in premarket electronic trading on the New York Mercantile Exchange.
That all sent global stocks reeling. In Japan, the Nikkei 225 index tumbled 3.3 percent Thursday to its lowest in 2 1/2 years. Markets in Europe were all down more than 1 percent.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.41 percent from 3.44 percent late Wednesday.
Analysts in the United States noted Wednesday that the U.S. housing market remains in tatters, while inflation is a growing threat to consumer spending that is already showing signs of weakness. While the Fed's plan to make more money available to financial institutions can help, it won't solve the many deepening economic problems in the U.S.
The dollar's slide is of particular concern because it is helping to send commodities prices including oil to greater highs - in turn feeding the growth of inflation.
The Fed's Open Markets Committee meets next Tuesday and is widely expected to lower interest rates, with many analysts forecasting a drop of 0.50 percentage point. However, in the past few weeks investors have been questioning whether another rate cut will also help the economy.
Investors on Thursday will be looking for further clues about the health of the economy with reports expected to arrive before the opening bell. The Commerce Department is expected to release its February retail sales report.
The Labor Department is also expected to weigh in with its index on the cost of imported goods in February as well as with weekly figures on the number of people seeking unemployment benefits.
Overseas, Britain's FTSE 100 fell 1.70 percent in morning trading, while Germany's DAX index slid 2.31 percent, and France's CAC-40 lost 2.32 percent.
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