Futures fall as credit worry plagues banks
NEW YORK (Reuters) - Stock index futures fell on Wednesday, suggesting Wall Street may add to steep declines from late in Tuesday's session and join global equities markets in a sell-off over mounting credit worries.
Bank and brokerage stocks fell in electronic trading before the open after Bear Stearns Cos. Inc. (BSC.N: Quote, Profile, Research) said it halted redemptions in a hedge fund after nervous investors sought to withdraw their money. Two Bear Stearns hedge funds collapsed last month due to the subprime mortgage meltdown.
Bear Stearns' stock fell more than 3 percent to $117.24 before the bell.
Volatility in the stock market has soared. Wall Street sank on Tuesday, with all three major benchmarks down more than 1 percent at the close despite a higher open.
"We had an extremely volatile session, the first time since 2003 the Dow was up and down 1 percent," said Al Goldman, chief market strategist at A.G. Edwards in St. Louis. "What we're doing here is trying to regain some emotional stability after the debacle of last week."
S&P 500 futures were down 4.9 points, below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures lost 43 points, and Nasdaq 100 futures slid 7.5 points.
Other banks and brokerages whose shares declined included Lehman Brothers Holdings Inc. (LEH.N: Quote, Profile, Research), down 1.6 percent; Merrill Lynch (MER.N: Quote, Profile, Research) off 1.8 percent and Goldman Sachs (GS.N: Quote, Profile, Research) down 1.2 percent.
Futures extended losses temporarily after payroll processor ADP Employer Services said fewer private-sector jobs were added in July than economists had forecast. The 48,000 jobs added last month was the smallest number since July 2003, ADP said.
In takeover news, News Corp. (NWSa.N: Quote, Profile, Research) said it would buy Dow Jones & Co Inc. (DJ.N: Quote, Profile, Research) for $5.6 billion, adding the Wall Street Journal to its worldwide media empire and ending a century of family ownership of one of the top U.S. business news sources.
Dow Chemical (DOW.N: Quote, Profile, Research), the biggest U.S. chemical company, is considering making a bid for Britain's Imperial Chemical Industries
1 comment:
With regard to that last bit, I think that a bid on ICI by Dow Chem could happen. A few of their directors are pretty well connected as well as two of their past CEOs who are members of the same board. Here's a link to a NewsVisual article that talk a bit about this: http://www.newsvisual.com/newsvisual/2007/08/dow-and-ici.html
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