Credit worries and bad news from home builders trumped any positives from the stream of earnings being reported this morning. Wall Street is set up for a steep drop on the opening and the talk in the market focuses on whether the takeover boom is ending.
Stock futures are sharply lower and seemed to fall in one big downdraft as Wall Street evaluates earnings reports from a number of important companies. But it's fear that the deal business is in trouble that is on the minds of stock traders.
"It was a very aggressive more down, but it's more of a buyer's strike," said Kevin Ferry of Cronus Futures on "Squawk Box" this morning. "There are serious concerns about housing and the whole credit market."
The move coincides with a flight to quality in the bond market that has taken the yield on the 10-year to 4.85%, its lowest level since May. The dollar is being sold aggressively against the yen, though it is holding its own against the euro.
Ford reported a surprise profit of $750 million, marking its first profitable quarter in two years. Ford CEO Alan Mulally will appear on "Power Lunch."
But the home builders were full of bad news. Beazer Homes reported a $123 million loss, which included big charges from write downs. D.R. Horton also reported a steep loss of $823 million, also including big charges.
Oil major Exxon's stock is falling after it missed its earnings target by 13 cents per share. 3M topped earnings estimates and Apple is still aglow from its blow away profits reported late yesterday.
New orders for durable U.S. goods rose slightly less than expected in June, following a decrease in the previous month. Commercial aircraft boosted the gain, according to the Commerce Department report.
For a market fearing the worst, stocks yesterday took in stride the cancellation of two big debt deals as Wall Street banks absorbed a big pile of loans from the Cerberus Chrysler deal and KKR's Boots deal with bridge commitments. The pile of paper will come to market later but it shows Wall Street stepping up to defend its big merger business, one of its biggest cash cows.
But that news is haunting the market this morning. Punk Ziegel analyst Richard Bove today called those growing bridge loans potential "poison" on the books of the firms. He also said $300 billion in deals are waiting to be funded by the end of the year.
Yesterday, the Dow ended up 68 points in up and down trading that took it up 105 and down 42. The S&P 500 rose seven points, and the Nasdaq climbed eight.
There's much chatter on the Street that deals will get done but that the size of future deals may be scaled back, meaning not every company is an LBO target any longer.
CNBC's David Faber will talk about the deal business today. He says despite the rumors, announced takeovers so far do not appear to be in jeopardy. "If the economy were very bad, it would be a different story," he said.
CNBC's senior economics correspondent Steve Liesman today will take a look at what the impact of the bridging of these loans will have on the banks themselves and the economy.
No Cheese Whiz!
It's true. As rumored Warren Buffett is an investor in Kraft, says the Wall Street Journal. He joins activist investors Carl Icahn and Nelson Peltz.
A Treasury sponsored conference on business taxation and global competitiveness will be held today at 9 am. Opening remarks will be made by Treasury Secretary Hank Paulson but the event features an all star cast including former Fed Chairman Alan Greensapn. Caterpillar's Ceo James Owens and Fred Smith, CEO of FedEX. You can watch the whole event on CNBC.com.
Oil is rising this morning after crude shot up 3.2% yesterday to $75.88 on inventories, refining issues and new comments from Iran. Iranian President Mahmoud Ahmadinejad said yesterday that Iran would never yield to international pressure to stop its uranium enrichment work. Oil staged its biggest one-day increase since May 17, recovering the week's losses.
"I was saying it was a correction and nothing more and that's how we saw it. Crude oil was very overbought and very extended. There was some over enthusiasm about the return of some of the refineries and there was also some over enthusiasm about the talk out of OPEC. Clearly we're right back into the upward trend channel that was started in early May and we look for more," said MF Global senior vice president John Kilduff, a CNBC contributor.
"This has been a demand story for the last couple of years on the strong underlying economy. We're starting to question whether these subprime woes are going to dampen the economy enough to slow demand," he said. But he added that the global economy is booming and currencies in Asian countries have strengthened significantly against the dollar.
"The rest of the world is booming. Given the relative strength of their currencies compared to ours, they're not paying anywhere near $80. They're paying like $40 a barrel if you look at it from the point of view of the strength of their currencies vs. the dollar," said Kilduff.