U.S. stock futures were much lower Thursday, indicating a tough start for Wall Street today -- the seventh anniversary of the 9/11 attacks. Investors sentiment was mired by concerns over the financial sector as Lehman and WaMu continue to have difficulties and braced themselves for a slew of economic reports including weekly initial claims, trade deficit for July and inflation figures for international trade for August. Meanwhile, oil declined as Saudi Arabia broke ranks on OPEC.Lehman Brothers Holdings Inc. (NYSE: LEH) tried to calm investors Wednesday when it presented its rescue plan including the sale of its investment arm. But investors don't seem convinced and are frustrated with the company and its CEO, the longest serving CEO on Wall Street. Too much planning and intent, not enough action. After plunging 45% Tuesday, LEH stock was down another 7% or so Wednesday to $7.25 on Wednesday. They are shedding another 14.5% in pre-market trading at 7:32 am.
[Update 9:00 a.m.: Following the several downgrades, Lehman shares are plunging over 40% in pre-market trading. Stock futures are drastically lower as well, indicating stock will likely open much lower.]
Washington Mutual (NYSE: WM) shares have been sharing the same fate as Lehman's lately, as they plunged to their lowest point in nearly two decades Wednesday, diving 29.7% to close at $2.32 - a 17-year low. As of 7:33 a.m., shares are declining another 2.6% in pre-market trading. WaMu is expected to have losses in its mortgage portfolio expected of $19 billion, and some believe it could be Wall Street's next casualty.
And as if that wasn't enough, The Wall Street Journal reports that there will be hearings on alleged tax shelters provided to hedge funds by investment banks including Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER).
Campbell Soup (NYSE: CPB) and apparel firm lulelemon (NASDAQ: LULU) are due to report earnings today.
New York Times (NYSE: NYT) shares jumped nearly 6.5% in after-hours after Mexican billionaire Carlos Slim disclosed the purchase of a stake of 6.4% in the newspaper publisher.
Petrobras (NYSE: PBR) are trading 2.25% higher after it and other companies found that oil in the Santos Basin contains up to 4 billion barrels of oil. PBR holds 65% of the field.
General Motors (NYSE: GM) is under pressure from the U.S. government's pension-insurance agency to absorb at least $1.5 billion of the pension obligations of parts producer Delphi Corp., according to The Wall Street Journal.
The Wall Street Journal also reports that "Apple Inc. (NASDAQ: AAPL) Chief Executive Steve Jobs and several other current and former Apple executives and directors have agreed to a tentative settlement in a shareholder lawsuit that alleged improper stock-option practices at the company."
Analyst calls:
- Goldman Sachs upgraded Novartis AG (NYSE: NVS) from Neutral to Buy, citing a more diversified business.
- Citigroup downgraded Lehman Brother (NYSE: LEH) from Buy to Hold with a $9 price target, due to perception in the market rather than fundamentals.
- Goldman Sachs also downgraded Lehman Brothers (NYSE: LEH) from Buy to Neutral and cuts its price target from $22 to $7 as uncertainity remains.
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