India | UK | US

Futures drop as details of U.S. bailout awaited

Posted : Mon, 22 Sep 2008 12:05:07 GMT
Author : Reuters
Category : US (Business)
News Alerts by Email ( click here )
US Business News | Home
By Ellis Mnyandu

NEW 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.

Share/Save/Bookmark

Article : Futures drop as details of U.S. bailout awaited
Print this article
Email this article

Stay Updated
News gadget on your Google homepage
Subscribe to a news feed in Google Reader



Have your Say
Name
Email
Subject
Your Comment

Enter Verification code
 
  

 

 

More US (Business) News click here
Follow The Earth Times
Subscribe to RSS Follow Earth Times on TwitterNews by email
Share/Save/Bookmark

 
 



 
Subscribe to free Earthtimes
News Alerts by Email Click here
For RSS Feeds Click here
or Create your own RSS

Add to Google Toolbar
Breaking News
Press Releases


The Earth Times
News Category

© 2009 www.earthtimes.org, The Earth Times, All Rights Reserved | Privacy Policy
Earth Times accept no responsibility or liability either directly or indirectly for views or opinions expressed in articles or comments.