Just one day after investors ran up stocks in expectation of a bailout plan, U.S. stock futures dropped significantly Friday as the $700 billion bailout plan wasn't approved after all and as Washington Mutual was seized by regulators in the country's largest-ever failure. Discussions over the bailout are still ongoing, while JPMorgan Chase was forced to acquire the rest of WaMu. To add to an already tense environment, the final release of the second-quarter GDP is due at 8:30 a.m. EDT, and the September University of Michigan's consumer confidence index is due out at 10 a.m EDT.Washington Mutual Inc. (NYSE: WM) was seized by the Federal Deposit Insurance Corp. on Thursday, and then sold the thrift's banking assets to JPMorgan Chase & Co. (NYSE: JPM) for $1.9 billion. It was the largest failure by a U.S. bank. JPMorgan also said it would raise another $8 billion through the sale of stock. WM shares are down nearly 85%, JPM's down over 2% in pre-market trading.
Research In Motion Ltd. (NASDAQ: RIMM) posted a sharply higher quarterly profit on Thursday, in line with expectations, but gave a forecast that was below expectation. Investors are concerned that as the economy slows, RIM's large corporate clients could scale back BlackBerry purchases and upgrades. Deutsche Bank downgraded RIM from Hold to Sell, saying it relies more on hardware sales thse days, which means new product launches in this environment could worsen. RBC Capital Markets also downgraded RIM from Outperform to Sector Perform, but Credit Suisse, upgraded RIM from Underperform to Neutral. RIMM shares are down over 20% in pre-market trading.
Apple Inc. (NASDAQ: AAPL) shares are down 4.5% to $126 in pre-market trade following its rival, RIM's, results Thursday. Bloombgerg reports that a judge granted Apple's request and dismissed a lawsuit claiming it didn't immediately tell customers about the limited life of batteries for its iPhone or their $86 replacement cost, including delivery. Meanwhile, the Telegraph reports that iTunes is under threat as bands take their business elsewhere.
Microsoft Corp. (NASDAQ: MSFT) also had a good day in court as a a panel of federal appeals judges has ruled ruled Microsoft does not have to pay $1.5 billion in damages to Alcatel-Lucent SA (NYSE: ALU).
HSBC Holdings PLC (NYSE: HBC) said it is cutting 1,100 jobs worldwide, or 4% of its global banking and market operations, in the wake of the financial turmoil.
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Reader Comments (Page 1 of 1)
9-26-2008 @ 8:54AM
Beltway Greg said...
Here's the dilemma: We've spent $600b so far in Iraq. Why have we gotten so cheap that we refuse to spend $700b for our country? What will we get from Iraq? Cheap oil? Not quite. Many of the assets that will be purchased under Paulson's plan will actually have some value in the future but cannot be valued under the current mark-to-market accounting rules. On Oct. 1, short-term lines of credit will come due and if the lending windows are closed the dow will decline precipitously. The shuttering of businesses across America will cost far more than $700b in terms of the social safety net that will have to be enacted to save our country. Please call your elected representatives and get them to do something other than grandstand. If not shorts will reign, interest rates will rise, jobs will vanish, life expectancy will decline, and political ideologues will will rule the day. We will emulate modern day Russia.
Beltway Greg
9-27-2008 @ 9:57AM
george said...
let rome burn.