November 20, 2007
Stock futures Tuesday advanced after a miserable session, with rate-cut hopes and Hewlett-Packard's upbeat earnings helping to provide some cheer. But poor results from Freddie Mac seem likely to keep housing and credit concerns front and center.
About an hour before the start of trading, S&P 500 futures advanced 8.3 points at 1445.80 and Nasdaq 100 futures rose 19 points at 2,047.00. Dow industrial futures rose 68 points to 13061. Futures trading doesn't always accurately predict how markets will develop after the opening bell.
Stocks took a beating Monday, with the Dow Jones Industrial Average falling below 13000, as two old culprits -- financials and housing -- contributed to the market's widespread distaste for equities. All three major indexes were down more than 1%.
The Dow industrials fell 218.35 points to 12958.44, only the second time since Aug. 16 that the blue-chip barometer closed below 13000. Other market gauges also fell. The S&P 500 dropped 25.47 to 1433.27, and the Nasdaq Composite Index declined 43.86 to 2593.38.
The impact of the ongoing credit crunch was seen Tuesday in results from the government-backed mortgage buyer Freddie Mac, which said the fair value of net assets dropped $8.1 billion in the third quarter, leading to a $2 billion loss for the quarter and the company considering a cut in its fourth-quarter dividend. In pre-open trading, Freddie Mac dropped over 5%.
After a big market drop Monday, traders speculated that the Federal Reserve may step in with an emergency rate cut, talk that helped lift international stock markets. There also was speculation of intervention to help the beleaguered U.S. dollar. Such speculation aside, news from the Fed is due in the form of the minutes from its October meeting. The minutes are scheduled for release at 2 p.m. Eastern time.
Currency analysts at Credit Suisse say markets are currently pricing in a 90% chance of a Fed funds cut in December. "Any disappointment here would likely hit carry trades and risky assets in general," they said.
October housing starts data also will be released.
The euro rose to a new all-time record against the dollar, and gold futures jumped $11.50 to $789.50 an ounce. January-dated crude-oil futures rose $1.05 to $95.69 a barrel.
Of stocks in focus, Hewlett-Packard rose 3.2% in pre-open trading after the computer maker reported a stronger-than-forecast 28% profit rise, and importantly, forecast current-quarter earnings ahead of Wall Street estimates.
Nordstrom shares may rise after the retailer expanded its share buyback plan to $2.5 billion and reported a 22% profit rise.
Builder D.R. Horton gained 6% in pre-open trading after losing less during the most recent quarter than analysts had estimated.
In major market action Monday:
Stocks were lower. On the New York Stock Exchange, 563 stocks advanced and 2,741 declined.
The dollar declined. The dollar fell to 109.81 yen from 110.91 yen. The euro rose to $1.4666 from $1.4654.
Bonds gained. The two-year note was up 8/32 at 3.18% and the 10-year note was up 19/32 at 4.08%.
Write to the Online Journal's editors at newseditors@wsj.com
Source : http://online.wsj.com/article/SB119556458735099167.html?mod=googlenews_wsj
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