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Stocks set to plunge ahead of bad jobless numbers

By Reuters
Thursday, August 18, 2011 7:14 EDT
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NEW YORK (Reuters) – Stock index futures pointed to a sharply lower open on Wall Street on Thursday, with futures for the S&P 500 down 2 percent, Dow Jones futures down 1.5 percent and Nasdaq 100 futures down 2.2 percent at 5:17 a.m. EDT.

Japan’s Nikkei stock average dropped 1.3 percent, falling below the closely watched 9,000 line, hurt by the yen’s persistent strength and fears the United States might be heading for another recession, with many investors on the sidelines ahead of U.S. economic data.

European stocks were down 2.3 percent, with heavyweight miners among the heaviest losers as nagging fears about the outlook for the global economy prompted investors to sell recent gains from the market’s tentative recovery rally started last week.

Investors were bracing for a raft of U.S. macro data, including weekly jobless claims, existing home sales and the Philadelphia Federal Reserve Bank’s business activity index, seen ticking up to 3.7 from 3.2 last month, suggesting only modest activity growth.

The global economy is “dangerously close to a recession”, Morgan Stanley said, as it slashed its growth forecast for 2011 and 2012, citing recent policy errors in the U.S. and Europe and the prospect of further fiscal tightening in 2012.

Morgan Stanley cuts its global gross domestic product growth forecast to 3.9 percent from 4.2 percent for 2011, and to 3.8 percent from 4.5 percent in 2012.

On the earnings front, companies including Hewlett-Packard, Gap and Sears Holdings are due to report results.

Limited Brands Inc reported a higher-than-expected profit as it sold more lingerie at full price and the company raised its August same-store sales and full-year profit forecasts, sending its shares up more than 3 percent.

Data storage equipment maker NetApp Inc posted quarterly revenue below Wall Street projections, saying business fell dramatically in July — the latest sign that global technology spending is slowing.

JDS Uniphase Corp forecast weak first-quarter revenue on macro-economic challenges and inventory corrections, but said booking trends were encouraging.

Insurance broker Marsh & McLennan Cos Inc said it will buy back an additional $500 million of shares, doubling its share repurchase program to $1 billion.

China Mobile logged its fastest half-yearly profit growth in nearly three years as the world’s largest mobile phone operator by subscribers attracts more high-end 3G users upgrading to smartphones.

Tech shares fell on Wednesday after Dell’s disappointing sales outlook fanned worries that weak economic growth will hurt earnings in the third quarter.

The Dow Jones industrial average was up 4.28 points, or 0.04 percent, at 11,410.21. The Standard & Poor’s 500 Index was up 1.12 points, or 0.09 percent, at 1,193.88. The Nasdaq Composite Index was down 11.97 points, or 0.47 percent, at 2,511.48.

(Reporting by Blaise Robinson; Editing by David Hulmes)

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