Ugly Day Ahead on Wall Street
Buckle up. It looks like it will be an ugly day according to the market futures. Maybe even a day when the circuit breakers are put into effect. So far, Dow Jones industrial average futures are down more than 500 points or 6 percent. Futures for the Standard and Poor's 500 index are down 6.5 percent or 60 points and Nasdaq futures are down 6.7 percent or 84 points.
The declines were enough to halt trading in the S&P's pre-market futures contracts, while the drops in the other indices were edging close to circuit-breaker limits. Those limits are set each quarter, based on the value of the markets at the start of the quarter. That means that once the markets open today, drops equal to between 10 and 20 percent of the market value at the start of the quarter -- between 1,100 and 2,200 in the Dow, for example -- would trigger temporary trading halts. The length of a halt would depend on the time of day when the limits are breached.
Unlike the rest of this week, in which the market responded to a high volume of earnings reports and shifting forecasts from major U.S. firms, it looks like today's market will respond to more troubling news in the global economy.
Today, the UK government said its economy contracted 0.5 percent. In Asia, markets fell between 9 and 11 percent. Japan's Nikkei fell 9.6 percent to a five year low on continuing fears of declining exports. South Korea is bracing for corporate bankruptcies on exports and concern about foreign investors taking money out.
Today, OPEC agreed to cut production by 1.5 million barrels a day as oil prices continue to fall and demand weakens. Today, oil is trading at $65 a barrel.
This morning, we will be watching for data on home sales, which is not expected to be encouraging. A few more earnings are out today, including Exxon Mobil.
And there's one more hearing on Capitol Hill related to the financial crisis: The House Education and Labor committee will discuss the need for a second stimulus bill. The top witness will be the head of the nation's pension guarantee board.
Check back here for live updates throughout the day.
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