Futures drop as details of U.S. bailout awaited
|
|
|
By Ellis MnyanduNEW YORK (Reuters) - Stock index futures fell on Monday as investors awaited details on Washington's planned $700 billion bailout to stem financial sector turmoil.Investors worried Congress would seek to change the Bush administration's proposal and paused after Friday's surge when Treasury Secretary Henry Paulson announced a plan that could reshape the U.S. financial landscape.Goldman Sachs and Morgan Stanley , whose shares were pummeled last week, are abandoning their investment bank model of two decades. They will become bank holding companies with an additional safety net from the Federal Reserve."Some skepticism about whether or not the bill is going to be passed the way Paulson wants it to be might be giving the market a bit of a hiccup," said Peter Cardillo, chief market economist at Avalon Partners in New York."Will they add things to it? So that raises the level of skepticism. Secondly, what does it mean for inflation? This could be very inflationary."Officials have said the plan, in which the government will buy soured mortgage-related debt from financial institutions, will cost taxpayers hundreds of billions of dollars.S&P 500 futures fell 7.10 points but were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures dropped 78 points and Nasdaq 100 futures shed 10.75 points.Rising oil prices could be another headwind for the market, with U.S. front-month crude up $2.28 at $107.13 a barrel as the dollar weakens.Sweeping government measures to rescue the financial system and restore confidence in shaky markets spurred a huge relief rally in U.S. stocks on Friday, ending a week that saw the most dramatic reshaping of the financial landscape since the Great Depression.Abandoning their investment banking business model means Goldman Sachs and Morgan Stanley will be regulated by the Fed and receive protection from the financial storm that destroyed their rivals. Their move effectively ends Wall Street's investment banking model.In other news, asset manager Legg Mason Inc is looking to go private, The New York Post reported, citing people familiar with the situation.(Editing by Kenneth Barry)
(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
|
|
|
|
|
|
Related News
Five more US bank failures bring total for 2009 to 120
New York - Bank failures in the United States have risen to 120 this year as five more regional institutions were added to the list, the US agency that guarantees the safety of bank deposits said. United Commercial Bank in San Francisco with assets o...
US stocks climb slightly despite double-digit jobless rate
New York - US stocks posted mild gains Friday to end the week as investors shrugged off government figures that put the unemployment rate above 10 per cent. The Labour Department said the jobless rate hit 10.2 per cent in the month of October, the hi...
US joblessness hits 10.2 per cent, highest in 26 years - Summary
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years as another 190,000 people lost their jobs, the Labour Department reported Friday. The figure comes after a 9.8-per-cent jobless rate in September and wa...
US joblessness jumps to 10.2 per cent, highest since 1983 - Update
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years, as another 190,000 people lost their jobs during the month, the US reported Friday. The figure reported by US Labour Department came after the 9.8 per ...
US jobless rate jumps to 10.2 per cent
Washington - The US unemployment rate surged to 10.2 per cent in October as another 190,000 people lost their jobs, according to US Labour Department figures released Friday. The jobless rate stood at 9.8 per cent in September. Unemployment had been ...
Bulls stop James, edge Cavs - Summary
Los Angeles - The King couldn't deliver in the clutch. Luol Deng and Joakim Noah combined to deny LeBron James a potential game-winning drive in the final seconds as and the visiting Chicago Bulls snapped the Cleveland Cavaliers' three-game winning...
Mortgage lender Fannie Mae posts nearly 19-billion-dollar loss
Washington - US mortgage lender Fannie Mae said Thursday that it would seek 15 billion dollars in federal aid, after posting its ninth consecutive quarterly loss. Fannie Mae reported a net loss of 18.9 billion dollars in the third quarter of 2009, co...
|
|
|
|
|
|
|
|
