Futures Point Higher After Selloff
Futures pointed higher Wednesday as investors looked to scoop up some bargains after the previous session's selloff and shrugged off another dismal housing data point.
This comes after stocks tumbled to November levels, threatening to test the lows of that bear run, on Tuesday. The Dow lost nearly 4 percent yesterday, piling on to last week's 5.3-percent drop.
The Dow Jones Industrial Average shed nearly 297.81 points, or 3.8 percent, to close at 7552.60, within one point of its November closing low. (The November intraday low, however, is about 100 points lower.)
The S&P 500 lost 4.6 percent to close at 789.17, and the Nasdaq dropped 4.2 percent to close at 1,470.66.
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New home construction fell to a record low in January. Housing starts tumbled 16.8 percent to a 466,000 annual rate, following a 14.5-percent drop in December. Economists had expected a much milder drop to a 525,000 annual rate. Year over year, housing starts were down more than 50 percent from January 2008.
Building permits, a gauge of future activity, fell by 4.8 percent last month after an 11.1-percent drop in December.
A separate report showed mortgage applications soaredlast week after interest rates dropped below the key 5 percent level. Applications jumped more than 45 percent, primarily due to a swell in refinancings.
Among other economic news this morning, import prices fell 1.1 percentin January, the sixth straight month of decline. It was less than expected and much milder than the 5-percent decline in December. Export prices ticked up 0.5 percent, the first increase in six months.
Still to come is a report on industrial production and capacity utilization.
Futures lost some ground earlier as European markets were again dragged down by banks. Royal Bank of Scotland moved lower after a report that it would need $11 billion to protect its assets.
Goodyear Tire reported a steeper-than-expected loss but announced a continued aggressive restructuring program aimed at cutting costs.
Also, Comcast shares gained more than 3 percent even though the cable operator saw its quarterly profit drop 32 percent due to a writedown and a loss of subscribers. Earnings of 27 cents a share beat Wall Street estimates by a nickel.
But Deere shares dropped about 2.6 percent after the world's largest maker for farm equipment also missed profit estimates, and lowered its forecast for 2009.
Shares in Asia were also lower and Taiwan cut its key interest rate to a record low.
Alan Greenspan didn't add much optimism to the current situation with a speech on Tuesday. The former Federal Reserve chief said that the recession will be the longest and deepest since the 1930s and added that more TARP funds would be needed to stabilize the US banking system.
Auto makers will continue to be in focus after General Motors and Chrysler asked the government for $22 billion more to stay in business. GM shares gained 1 percent in premarket trading after tumbling 12.8 percent Tuesday.
And investors will be hoping for details of President Obama's plan to save homeowners from foreclosure.
OfficeMax and Playboy also report numbers.