If you're a bear, then at least another down beginning may await you in today's session. At least, that's the indication U.S. stock futures are giving this morning. As economists forecast the risk of a recession increased due to the collapse of the housing market along with the credit crunch and as oil prices jumped again on OPEC comments, it seems the bears have returned. On Friday, U.S. stocks saw volatile session that ended with gains, with the Dow industrials rising 66 points, or 0.51%, the Nasdaq Composite up 18 points, or 0.72%, and the S&P 500 rising 7 points, or 0.52%. On the week stocks finished higher in a week full of wild swings. The Dow ended up 1.03%, the S&P 500 and the Nasdaq ended up 0.35%.
Not much economic data is due today so investors are focusing on rising oil prices, overseas activity and some M&A action.
After Iranian President Mahmoud Ahmadinejad said Sunday that OPEC's members are interested in a non-dollar currency and would to like to convert their cash reserves into the euro, oil prices rose today. Also, the possible OPEC output hike next month may not get more supplies to market in time for the northern winter. Oil rose nearly a dollar to trade above $94.50 a barrel.
Also, the National Association of Homebuilders will release its November index - a gauge of homebuilder confidence - at 1 p.m. EST, putting that battered sector and its effect on the economy in focus again. Later this week more housing indicators are due. This morning, Lowe's Corp. (NYSE: LOW) reported financial results. LOW shares are down 4% in premarket trading.
Overseas, Asian stocks finished mostly lower with Japan's Nikkei tumbling to its lowest level all year. European stocks are also being dragged by the same concerns of slowing economic growth in the U.S as Swiss Re announced a 1.2 billion Swiss francs write-down (or $1.1 billion) due to subprime exposure. Also, the government said the Northern Rock Plc's 25 billion-pound ($51 billion) loan from the Bank of England won't be extended indefinitely.
In deal news, Pharmion Corp. (NASDAQ: PHRM) agreed to be acquired for $72 a share, or $2.9 billion, of cash and stock by Celgene Corp. (NASDAQ: CELG). CELG shares are down over 2% in premarket trading.
SABMiller, the world's third-largest brewing company, said it intends to bid €816 million ($1.2 billion) for Grolsch NV, or €48.25 ($70.57) per share.
In other news, Hewlett-Packard (NYSE: HPQ) is reporting after the bell, Xerox (NYSE: XRX) announced its first dividend in more than six years and Citigroup (NYSE: C) was downgraded to Sell from Neutral at Goldman Sachs as the broker expects the bank to write down up to $15 billion from collateralized debt obligations over the next two quarters. Citi shares are down 3% in premarket trading.
Before the bell: Futures higher ahead of housing, jobless data
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Reader Comments (Page 1 of 1)
11-19-2007 @ 8:49AM
william lindblad said...
One can expect more down days. Swiss Re is the first, but will be one of many, and this is a re-insuance company, not a bank. The European banks start reporting late this month and only a fool would expect positive results. It is not over in the U.K and Northern Rock cannot be funded indefinetly as this is really taxpayer provided. The BOE move does not enjoy public support. In early Dec. the U.K banks report and one should expect the same as the continent. Barclay's has already fessed up.
On the domestic front, mortgage default will continue and so will tightening of credit. It seems that all economic reporting has little stomach for projecting the months ahead. Well, someone should take into account that massive building is still in progress as the builders cannot get out of existing sub-contracting. When this reaches its climax, the lay-offs will begin and this work force will join the ranks of the unemployed. Next will be the housing and builder suppliers, the domino effect will continue well into 2008. This in turn will further depress housing prices and exisiting write-downs. If oil continues its rise and water shortages become more widespread, 2008 is going to be a very bad year.