US Stocks Head for Lower Open

U.S. stocks headed for a lower open Wednesday after orders for big-ticket manufactured goods declined for a second straight month in February.

The Commerce Department report that durable goods orders fell 1.7 percent last month -- rather than rising as the market expected -- appeared to rekindle some unease about the health of the economy.

The report comes a day after stocks generally extended their gains after two sessions of sharp advances. The market's recent ability to add to its climb has been greeted by bullish investors as a sign that its troubles are on the mend; Wall Street hadn't succumbed to a recent pattern of selling off after such a strong move upward. The Dow Jones industrial average has risen more than 425 points in the past three sessions.

But the durable goods numbers made it unclear whether the rally would hold.

Government figures are also due after the opening bell on new home sales.

Dow Jones industrial average futures fell 38, or 0.30 percent, to 12,477. Standard & Poor's 500 index futures fell 4.30, or 0.32 percent, to 1,347.10, while Nasdaq 100 index futures fell 4.80, or 0.26 percent, to 1,821.20.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.50 percent from 3.51 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose $1.01 to $102.23 in premarket electronic trading on the New York Mercantile Exchange.

Corporate news appeared to weigh on some investors. Private equity firms leading a $19.5 billion buyout of Clear Channel Communications Inc. were having difficulty reaching terms with the banks committed to financing the deal and the plan was close to collapse, according to a report by The Wall Street Journal.

In other corporate news, Motorola Inc. said it plans to split its troubled handset business from other operations, creating two separate, publicly traded companies.

Electronic parts manufacturer Jabil Circuit Inc. posted a fiscal second-quarter loss and warned its third-quarter results will fall short of Wall Street's expectations.

Overseas, Japan's Nikkei stock average fell 0.30 percent. In morning trading, Britain's FTSE 100 fell 0.48 percent, Germany's DAX index fell 0.41 percent, and France's CAC-40 was off 0.62 percent.

Wall St sinks as Bear shakes faith in banking

Stocks fell on Monday after JPMorgan Chase (NYSE:JPM - News) bought Bear Stearns (NYSE:BSC - News) at a fire sale price and the Federal Reserve provided emergency cash to Wall Street as the global credit crisis worsened.

But stocks trimmed losses as shares of JPMorgan led advancers, while the Fed's move to cut its discount rate to 3.25 percent and expand lending to a wider range of big financial firms -- the first such move since the Great Depression -- helped Wall Street ease a bit off early lows.

Futures have been pricing in a 100-basis-point cut from the Fed when it meets tomorrow.

JPMorgan is buying Bear Stearns for $236 million, or $2 per share -- one-fifteenth of the price at Friday's close. Shares of Bear, which until recently had ranked as the fifth-largest U.S. investment bank, reached a high of $172.61 last year. Bear's stock plummeted 87.3 percent to $3.91 at midday on Monday.

The financial sector tumbled, as Lehman Brothers (NYSE:LEH - News) sank 23.9 to $29.86 and Citigroup dropped 7.3 percent to $18.35. The Standard & Poor's financial index (^GSPF - News) was down 3.6 percent.

JPMorgan, the top gainer in both the blue-chip Dow average and the S&P 500, climbed 8.3 percent to $39.58, preventing an uglier morning on Wall Street.

"The Fed took very aggressive action over the course of the weekend, and so that's having an impact," said Michael Darda, chief economist at MKM Partners LLC, in Greenwich, Connecticut.

"The problem is that action will have an inflationary price tag. And you can see that in all of the commodity and currency indicators."

The Dow Jones industrial average (DJI:^DJI - News) dropped 114.39 points, or 0.96 percent, to 11,836.70. The Standard & Poor's 500 Index (^SPX - News) shed 23.44 points, or 1.82 percent, to 1,264.70. The Nasdaq Composite Index (Nasdaq:^IXIC - News) tumbled 44.78 points, or 2.02 percent, to 2,167.71.

In a fresh sign of faltering confidence in the U.S. economy and financial system, the dollar sank to its weakest against the yen since 1995 and slumped against the euro.

The "fire sale" of Bear has put U.S. banks at risk as it will result in valuation adjustments that could result in a drop of stock prices by as much as 50 percent, Oppenheimer & Co analyst Meredith Whitney wrote.

Elsewhere in the financial sector, mortgage insurer PMI Group Inc (NYSE:PMI - News) reported its biggest-ever quarterly loss, mainly due to losses on its investment in bond insurer FGIC Corp. It also slashed its dividend by more than 70 percent.

Shares of PMI dropped 11.3 percent to $5.05, after hitting a lifetime low of $4.82 earlier in the session.

The New York Federal Reserve Bank reported an unexpectedly steep drop in its manufacturing survey and a rise in prices paid. It was the worst reading of business conditions in the state of New York since the index was launched in July 2001.

Stocks Extend Their Gains Following Employment Report, Hopes for Stimulus Plan

Wall Street scored its second straight big advance Thursday after economic figures suggested the job market is holding up and as lawmakers agreed on measures that could ease concerns about consumer spending. The Dow Jones industrials rose more than 100 points, bringing its two-day gain to more than 400.

While stocks fluctuated throughout the session, trading was decidedly more calm than on Wednesday, when Wall Street executed a stunning turnaround that transformed a sharp sell-off into big gains for stocks. Thursday's rise was notable, however, as investors will often move in a day after a rally or plunge to take profits or scoop up bargains. That the buying largely continued was a positive sign, observers said.

Investors were clearly interested in buying, but despite the size of the advance, there didn't appear to be much conviction to it -- the market is still searching for clues about the economy in hopes of determining whether it will soon pick up or will continue to slow and tip into recession.

In addition, the market wobbled during the session after Fitch Ratings lowered its rating on bond insurer Security Capital Assurance Ltd. Bond insurers have been hurt in the fallout from the mortgage and credit crises, and news of their problems has shaken the market.
But those seeking good news found some in a Labor Department report that said the number of people seeking unemployment benefits last week fell for a fourth straight week. Applications for benefits dropped 1,000 to 301,000, pushing claims down to the lowest level in four months.

Investors also appeared pleased by a widely anticipated agreement between congressional leaders and the White House on an economic stimulus package. The agreement calls for most tax filers to be given refunds of $600 to $1,200, and more if they have children.

Bill Dwyer, chief investment officer at MTB Investment Advisors in Baltimore, said Wall Street found some relief from word of the economic stimulus plan as well as the efforts of regulators to help bond insurers. He said the Federal Reserve's decision to lower interest rate this week could also help some struggling homeowners hold on to their properties. The efforts, he said, could ultimately help stave off recession.

"People have that 'R' word stuck on the front of their forehead. It's really just a dramatic slowing of growth. We may not have a recession," Dwyer said.
The Dow Jones industrial average rose 108.44, or 0.88 percent, to 12,378.61, following a nearly 300 point surge on Wednesday. The Dow has not finished higher for two straight sessions since Jan. 9-10.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 13.47, or 1.01 percent, to 1,352.07, and the Nasdaq composite index advanced 44.51, or 1.92 percent, to 2,360.92.
Advancing issues outnumbered decliners by 4 to 3 on the New York Stock Exchange. Consolidated volume came to 5.48 billion shares, down from 7.3 billion Wednesday.

The Dow on Wednesday swung 631.86 points from its low point to its high -- its largest single-day reversal in more than five years.

Stephen Carl, principal and head of equity trading at The Williams Capital Group, said Thursday's overall trading reflected a continuation of the bounce that first began on Tuesday, when the Fed lowered its federal funds rate by a steep 0.75 percentage point, or 75 basis points, to 3.5 percent.

He said investors were also encouraged that the government's rebate plan, while not perfect, appeared to be progressing. Still, despite some investors' mostly upbeat mood, uncertainty remained. The market's about-face Wednesday, while certainly a relief for many investors, illustrated the fractiousness that has settled into Wall Street in recent months.

"We still have a long way to go in getting the economy on track," Carl said. "Whether we dip into a recession or not, a lot of things need to be fleshed out in the markets."

Bond prices fell as stocks rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71 percent from 3.55 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose
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Light, sweet crude oil for March delivery rose $2.42 to settle at $89.30 a barrel on the New York Mercantile Exchange after the agreement on the economic stimulus plan. Traders wagered the plan to put money in consumers' pockets could increase demand for oil.

Some of Wall Street's most recent concerns relate to the downgrade from Security Capital and broader unease about the stability of bonds. However, investors also looked to New York state regulators in hopes they can hatch a plan to shore up the bond insurance industry. New York Insurance Superintendent Eric Dinallo said in a statement Thursday it likely will take time to draw up measures to help the industry.


After the Fitch downgrade, Security Capital fell $1.16, or 30.6 percent, to $2.63.

Beyond bond insurers, investors have been concerned about the health of corporate profits.

Microsoft Corp. rose more than 4 percent in after-market trading from its Thursday close of $33.25 following the release of its fiscal second-quarter earnings. The company posted a 79 percent jump in profit, surpassing Street expectations, thanks to strong sales of Windows-based personal computers.


The Russell 2000 index of smaller companies dipped 0.71, or 0.10 percent, to 692.72.
Overseas, Japan's Nikkei stock average closed up 2.06 percent and Hong Kong's Hang Seng index fell 2.29 percent. Britain's FTSE 100 finished ahead by 4.75 percent, Germany's DAX index surged 5.93 percent, and France's CAC-40 jumped 6.01 percent.