Futures tumble on Bear Stearns fire sale
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By Jennifer CooganNEW YORK (Reuters) - Stock index futures plunged on Monday after JPMorgan Chase bought Bear Stearns for just $236 million and the Federal Reserve took emergency action to provide cash to Wall Street, raising concern that the credit crisis is spiraling out of control.The Fed made an emergency quarter-percentage-point cut to its discount rate to 3.25 percent and expanded lending to a wider range of big financial firms, in the first such move since the Great Depression of nearly 80 years ago.JPMorgan is buying Bear Stearns for $2 per share, or just one-fifteenth of the price the shares closed at on Friday. Shares of Bear, the fifth-largest U.S. investment bank, reached a high of $172.61 last year."This is not the kind of help you want to see. Bear Stearns getting sold at $2 is alarming," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York. "When you see the Fed relying on tools that haven't been used since the Depression, it's alarming."U.S. financial stocks tumbled in pre-market trading, led by an 87 percent slump in Bear Stearns. Lehman Brothers stock sank more than 30 percent to $27. Washington Mutual shares dropped 14 percent to $9.10.Elsewhere in the financial sector, mortgage insurer PMI Group Inc reported its biggest ever quarterly loss, mainly due to losses on its investment in bond insurer FGIC Corp. It also slashed its dividend by more than 70 percent.S&P 500 futures were down 29.10 points, well below fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 209 points, and Nasdaq 100 futures lost 39.25 points.U.S. economic indicators on tap include the New York Fed's manufacturing survey at 8:30 a.m. EDT and industrial production and capacity utilization at 9:15 a.m. EDT. The National Association of Home Builders reports its housing market index at 1 p.m. EDT.On Friday, the Dow Jones industrial average <.DJI> was down 194.65 points, or 1.60 percent, at 11,951.09. The Standard &Poor's 500 Index <.SPX> was down 27.34 points, or 2.08 percent, at 1,288.14. The Nasdaq Composite Index <.IXIC> was down 51.12 points, or 2.26 percent, at 2,212.49.(Editing by James Dalgleish)
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