Futures Fall, Election Fervor Short-Lived
It was back to business for Wall Street Wednesday. Futures pointed to a lower open as investors worried again about the economy after Sen. Barack Obama's victory in presidential elections.
Many analysts expect liberal mainstream economic measures from the White House, including large government deficit spending, with a strong emphasis on reducing wealth and health inequalities, which have widened markedly in recent years.
Obama's victory could also bring more regulation, especially in the beleaguered financial sector.
Outside the election, there were fresh reminders of the economic challenges facing the 44th president.
Planned layoffs surged to their highest in nearly five years during October, with cuts in the financial and auto sectors leading the charge, according to a report from outplacement firm Challenger, Gray & Christmas.
Job cuts announced in October totaled 112,884, up 19 percent from September, the report said, citing evidence of widespread economic malaise as troubles that began in housing and banking infect the rest of the economy.
That message was reinforced when ADP Employer Services reported that
private employers cut a larger-than-expected 157,000 jobs in October. ADP also said it revised the number of jobs lost in September to 26,000 from the originally reported loss of 8,000.
At the same time, the two biggest bond insurers were facing intense pressures following poor earnings reports.
Ambac tumbled close to 25 percent in premarket trading after the company reported
much bigger third-quarter loss, hurt by heavy investment write-downs and market losses.
The quarterly results were hit by $2.7 billion of unrealized losses on credit derivatives contracts, and the loss of its top-level credit rating.
And competitor MBIA was off about 16 percent after
reported a much larger third-quarter net loss on Wednesday, hurt by increased loss reserves and net investment losses.
The net loss widened to $806.5 million, or $3.48 a share, from $36.6 million, or 30 cents a share, a year earlier.
Energy prices surrendered some of their Tuesday gains, with oil off more than $2 a barrelin morning trade.
Credit spreads continued to easeas well, with overnight and 3-month interbank lending rates again moving lower.
Asian stocks were mixed, after an initial rally following the elections result, with the Nikkei closing up 4.46 percent.
European shares were lower, led down by banks after France's biggest bank BNP Paribas said its profit halvedand with an Obama win already been priced in.
In other financial news, the big broker-banks are preparing to lay off as much as 15 percent of their workforce as the economic slowdown continues to pound Wall Street, CNBC has learned.
Some of the biggest hits will come at Merrill Lynch, where 10,000 employees could be jettisoned as a result of the merger with Bank of America .
JPMorgan Chase is eliminating a group that traded the bank's own money in areas ranging from stocks to bonds to commodities, and will likely lay off some traders, according to Reuters.
And computer maker Dell, which is nearing the end of nearly 9,000 job cuts, has asked employees to consider taking up to five days of unpaid vacation, is offering voluntary severance packages and has instituted a global hiring freeze.