U.S. stocks will likely start the fourth quarter mixed as subprime mortgage woes seem to haunt markets. If anyone thought these problems just magically disappeared, they got a jolt of reality today when UBS warned of a massive writedown due to subprime mortgage complications. Not sooner after that, Citigroup said it will also see a writedown of $1.4 billion pretax expects third-quarter due to subprime mortgage-backed securities. Economic data will continue to trickle in this week, allowing investors analyze possible outcomes for the economy and future Federal Reserve policy. Mostly, investors will await the employment report on Friday after last month's surprise decline.On Friday, U.S. stocks closed a little lower on a day full of economic data that mostly came in line with expectations.
Economic reading today will include only the September index from the Institute of Supply Management at 10:00 a.m. The index, a survey of manufacturing executives, is expected to slip, although still be in the growth range.
While the dollar reached another record low against the euro, overseas, Asian stocks closed mixed and European stocks are trading lower following UBS's warning.
UBS (NYSE: UBS) announced will post a loss of up to $690 million in the third quarter from losses linked to the U.S. subprime mortgage crisis and a $3.4 billion writedown, cut 1,500 jobs and replace some top executives. UBS shares were down 2% overseas.
Citigroup Inc (NYSE: C) announced it expects third-quarter profit to fall 60% from last year after $1.4 billion pretax writedowns for unsold debt it issued to finance corporate takeovers and big losses on the value of subprime mortgage-backed securities. "It also expects losses of $1.3 billion pretax, net of hedges, on the value of subprime mortgage-backed securities warehoused for certain securitizations, and $600 million pretax in fixed-income credit trading due to significant market volatility and the disruption of historical pricing relationships." Citigroup shares are down over 2% in premarket trading.
Nokia Corp. (NYSE: NOK) is in advanced talks to acquire navigation-software maker Navteq Corp. (NYSE: NVT), according the Wall Street Journal, but deal could still stumble. Nokia shares are down 1.5% in premarket trading, NVT up over 5%.
The tentative contract between General Motors Corp. (NYSE: GM) and the United Auto Workers would allow GM to close a plant each in Michigan and Indiana and possibly shut down several other facilities.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
10-01-2007 @ 8:43AM
investag8ting said...
This fall out was expected and it's having a global impact. It's not just the subprime problem. The underlying problems are outsourcing and consequently our trade deficits. Add to that borrowing for wars with an unacceptable national debt. Also lowering value in the dollar and lower wages, while the price of gas and food goes up. Plus consumers are losing home equity. Add it all together and the consumers will have to eventually consume less. Some/many will go under on all debts. It will effect all sectors globally.