Stock futures point sharply lower Friday

NEW YORK (AP) - December 12, 2008

The defeat of the bailout bill late Thursday has prompted calls from lawmakers for the Bush administration to use a portion of the $700 billion financial rescue package to prop up the struggling companies. The bill failed after the United Auto Workers refused to meet Republican demands for big wage cuts.

General Motors Corp. and Chrysler LLC have said they could run out of cash within weeks without government help. Ford Motor Co., which would also be eligible for aid under the bill, has said it has enough cash to make it through next year.

The failure of the bill is feeding investors' concerns about job losses. More evidence of the battered labor market came late Thursday, as Bank of America Corp. said it expected to cut as many as 35,000 jobs over the next three years, including some from investment bank Merrill Lynch & Co., which it agreed to buy in September.

Dow Jones industrial average futures dropped 238, or 3.77 percent, to 8,359. Standard & Poor's 500 index futures fell 29.90, or 3.42 percent, to 844.60, while Nasdaq 100 index futures fell 37.75, or 3.17 percent, to 1,152.25.

Meanwhile, more glum economic data is expected Friday. The Commerce Department will release its retail sales report for November at 8:30 a.m. EST. The Labor Department is expected to release the producer price index for November at the same time. Later Friday morning, the Commerce Department will issue its report on business inventories for October.

The Commerce Department is expected to report that retail sales fell in November for a fifth-straight month despite a flood of shoppers over the Thanksgiving weekend. The report is a closely watched gauge considering that consumer spending drives more than two-thirds of the U.S. economy.

The reports will follow the Labor Department's announcement Thursday that initial jobless claims rose to the highest level in 26 years last week.

Job losses have become investors' primary concern in recent weeks, as companies across many sectors, including AT&T Inc., DuPont, Dow Chemical Co., and Freeport-McMoRan Copper & Gold Inc., have announced thousands of layoffs. And analysts don't expect the announcements to end anytime soon.

If one of the automakers declared bankruptcy, Some estimate as many as 3 million U.S. jobs could be lost next year.

In premarket trading, Ford shares dropped 44 cents, or 15 percent, to $2.46, while GM plummeted $1.31, or 32 percent, to $2.81.

Bond prices rose Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.51 percent from 2.63 percent late Thursday. The yield on the three-month T-bill dipped to 0.01 percent from 0.02 percent late Thursday. The bill has been in great demand because of the safety it offers investors.

The dollar rose against other major currencies, while gold prices fell.

Light, sweet crude fell $3.02 to $44.96 in electronic premarket trading on the New York Mercantile Exchange.

Markets overseas plunged in response to the failed auto bailout bill. Meanwhile, British Prime Minister Gordon Brown said European Union leaders have agreed on a $267 billion economic stimulus package to rescue their recession-hit economies. Japanese Prime Minister Taro Aso also announced a new stimulus package to shore up his country's economy. The new package includes $111 billion in tax breaks and public financing and $144 billion to prop up financial markets.

Japan's Nikkei stock average plunged 5.56 percent. In afternoon trading, Britain's FTSE 100 was down 3.65 percent, Germany's DAX index was down 4.27 percent, and France's CAC-40 was down 4.67 percent.


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