Stock futures dropped sharply Monday morning after the bailout plan was revealed Sunday and several banks in Europe were bailed out. U.S. investors are expected to react similar to stock markets around the word, which tumbled Monday following Washington's $700 billion bank bailout deal. The bailout may not be enough, and it will take a while to clean up the mess and restore confidence to financial markets. The economic reading due to be released today, August personal income and spending is not expected to affect markets much.Three major banking bailouts were announced in Europe. 1) The Dutch-Belgian bank and insurance giant Fortis failed and was provided with a $16.4 billion lifeline by the governments of Belgium, the Netherlands and Luxembourg. 2) The British government nationalized mortgage lender Bradford & Bingley -- the second British bank to be taken under government control this year. 3) A consortium of German banks and regulators bailed out Hypo Real Estate Holding AG, in a deal worth billions of dollars.
Wachovia Corp. (NYSE: WB) - after WaMu's failure, the focus has shifted to Wachovia and at least two major banks, Citigroup Inc. (NYSE: C) and Wells Fargo & Co. (NYSE: WFC), were reportedly in talks Sunday to buy it. Wachovia shares are trading down 60% to $4 in pre-market action. C and WFC shares are down over 6.5% and 3.5% respectively in pre-market trade.
Anheuser-Busch (NYSE: BUD) - InBev shareholders voted in favor of the $52 billion takeover deal for Bud. The new company will be called Anheuser-Busch InBev.
ImClone Systems Inc. (NASDAQ: IMCL) - The Wall Street Journal reports that according to its sources, the biotech company is "expected to announce on Monday that it is continuing talks to sell itself to a major pharmaceutical for a price in the range of $6.1 billion" after rejecting last week Bristol-Myers Squibb Co. (NYSE: BMY)'s increased bid for $5.4 billion, or $62 per share. The other suitor remains a mystery, but speculation is it could be Pfizer Inc. (NYSE: PFE). Eli Lilly & Co. (NYSE: LLY) has also expressed interest. IMCL shares are trading 4.3% higher in pre-market.
Circuit City Stores Inc. (NYSE: CC) and Walgreen Co. (NYSE: WAG) are due to report results today.
Apple Inc. (NASDAQ: AAPL) - Apple was downgraded by Morgan Stanley from Overweight to Equal Weight and price target was cut from $178 to $115. RBC Capital also downgraded Apple from Outperform to Sector Perform. AAPL shares are down over 5.5% in pre-market trading.
Following an agreement with the Massachusetts attorney general's office and the National Federation of the Blind Apple will make its iTunes service accessible to the blind. Blind Internet users have battled to gain better access to information on the Web.
Analyst calls:
Nortel (NYSE: NT) was upgraded from Neutral to Buy at UBS.
Motorola (NYSE: MOT) was downgraded from Buy to Hold at Citigroup.
Sprint Nextel (NYSE: S) and Comcast (NASDAQ: CMCSA) were downgraded by Oppenheimer from Perform to Underperform.
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