A Monday mess for Wall St.U.S. stocks set to follow overseas markets lower, as global retreat continues.NEW YORK (CNNMoney.com) -- Wall Street braced for an opening selloff as the international stock market retreat continued Monday. At 8:42 a.m. ET, Nasdaq and S&P futures, which predict the direction of stocks at the U.S. open, were sharply lower.   
Asian markets tumbled, with Tokyo's Nikkei down more than 3.3 percent. Meanwhile Hong Kong's Hang Seng closed off about 4 percent while the Shanghai Composite index, which was credited with sparking the selloff in U.S. markets last Tuesday, fell a more modest 1.6 percent, and stocks in Australia retreated more than 2 percent. European markets also opened lower and continued to slide. The dollar lost ground against the yen but gained against the euro. "Basically, it's follow the leader," said Peter Cardillo, chief market economist for Avalon Partners. "Obviously what started in Asia spread to the weak European bourses. The real nitty-gritty of the decline is the fear factor that is increasing." Cardillo said the Dow Jones industrial average could be in a for a rough day if it falls below the 12,000 level for the first time since November. It starts the day Monday less than 1 percent above that psychologically significant benchmark. Cardillo said he could see the U.S. markets, whose major indexes declined more than 4 percent last week, losing another few percent this week. But he doesn't expect this selloff to turn into a full-scale bear market with sharper, long-term declines. "I think we're going to be in for a bumpy ride, but I don't think we're heading for a correction that could lead to a bear market," he said. He said eventually the money being pulled out of Asian markets needs to find a home, and that some of it could end up in U.S. stocks to help stabilize markets here. Oil was down, reflecting the weakness in stocks. U.S. light crude slid $1.06 to $60.58 a barrel in electronic trading. Treasury prices rallied. The yield on the 10-year note fell to 4.49 percent from 4.5 percent late Friday. Blackberry maker Research in Motion (Charts) announced early Monday that a review of stock options grants will cause it to restate its financial statements since fiscal 2004. British Airways lost nearly 8 percent in early London trading after a so-called "open skies" agreement late Friday between the European Union and the United States that would create more competition on trans-Atlantic routes crucial to BA's earnings. U.S. airline stocks could get a lift Monday as the agreement could allow foreign investors to take larger stakes in U.S. carriers than currently permitted. Concerns about problems in subprime mortgages, the sector of the home loan industry serving borrowers with less than top credit, could batter the market once again Monday. New Century (Charts), the No. 3 lender in the sector, announced after the close Friday that prosecutors have opened a criminal probe into trading in its securities. Its shares lost 6.5 percent in after-hours trading Friday. And Fremont General (Charts), the No. 5 lender in the sector, said it is in talks to sell its subprime residential lending business. Its shares fell 17.5 percent after-hours. Great Atlantic & Pacific Tea (Charts), which operates the A&P grocery chain, agreed Monday to buy rival grocer Pathmark Stores (Charts) for $1.3 billion in cash, stock and debt. Takeover speculation could affect trading for a number of companies Monday. Palm (Charts), the maker of the Treo smart phone, is working with investment bankers to explore its strategic options, according to a report Monday in the Wall Street Journal. Shares of Palm gained 11 percent in Friday trading on takeover speculation. Wireless provider Alltel (Charts) stepped up efforts to sell itself to carriers such as AT&T (Charts), Verizon Communications (Charts) or Sprint Nextel (Charts), according to another report in the Journal. Ford Motor (Charts) could announce the sale of Aston Martin, its money-losing British luxury sports car unit, for more than $865 million as early as this week, according to a report on Reuters. Private equity firm Blackstone Group has emerged as a leading contender to buy Chrysler Group, the troubled U.S. division of German automaker DaimlerChrysler (Charts), according to a weekend report in the Detroit News. Shares of DaimlerChrysler still lost 2.3 percent in early Frankfurt trading Monday as part of the selloff. Polo-Ralph Lauren (Charts) and Swiss luxury goods group Richemont announced a joint venture early Monday to distribute watches and jewelry through shops of the U.S. company. ----- |
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