US Stocks Head for Sharply Lower Open

03/17/2008

NEW YORK (AP) - U.S. stocks headed for a sharply lower open Monday as Wall Street and other global markets were left reeling from JPMorgan Chase & Co. (JPM)'s buyout of the faltering investment bank Bear Stearns Cos. (BSC)

Dow Jones industrial average futures fell 201, or 1.68 percent, to 11,781. Standard & Poor's 500 index futures fell 26.20, or 2.03 percent, to 1,265.40, while Nasdaq 100 index futures fell 32.20, or 1.90 percent, to 1,660.

On top of the buyout, the Federal Reserve took the extraordinary step of lowering its discount rate - the rate it charges to loan directly to banks - just two days before its scheduled meeting Tuesday. The central bank lowered the discount rate by a quarter point to 3.25 percent.

The stunning implosion of Bear Stearns stirred fear among investors worldwide, some of whom were nervous that other banks had sizable exposure to troubled credit markets. Stocks fell sharply in Asia and Europe and oil prices set fresh records in Asian trading.

JPMorgan said Sunday it would acquire Bear Stearns for $236.2 million in a deal backed by the Fed. The price of $2 per share is far below the $30 per share at which Bear closed on Friday.

Bond prices surged as investors rushed for quality. The yield on the benchmark 10-year Treasury note, which move opposite its price, fell to 3.34 percent from 3.44 percent late Friday. The dollar was lower against other major currencies, while gold prices jumped.

Light, sweet crude rose 31 cents to $110.52 per barrel in premarket electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 3.71 percent, while Hong Kong's Hang Seng index fell 5.18 percent. In morning trading, Britain's FTSE 100 fell 2.06 percent, Germany's DAX index dropped 3.22 percent, and France's CAC-40 lost 2.76 percent.

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