Roger Biduk writes:
U.S. stock futures pointed to an opening slump as December kicked off, as gloomy worldwide economic data took the wind out of last week’s rally.
S&P 500 futures dropped 23.7 points to 871.60 and Nasdaq 100 futures fell 26.5 points to 1,159.25. Dow industrial futures dropped 177 points.
Last week, the S&P 500 climbed 12%, the Dow industrials rose 9.2% and the Nasdaq Composite rose 11%.
Mixed reports came out of the holiday shopping season. The National Retail Federation estimated that shoppers spent 7.2% more than last year, but another poll found that 70% of consumers only purchased deeply-discounted merchandise.
Also out on Monday will be the Institute of Supply Management’s gauge on manufacturing in November. Similar gauges released earlier in China, the euro zone and Britain each showed significant drops, with each of the gauges dropping to a record low.
“Although weaker PMI readings were expected for these economies, the magnitude of the declines was surprising, implying that activity slowed very sharply in the latest month,” said Nick Verdi, an economist at Barclays Capital.
Federal Reserve Chairman Ben Bernanke is speaking on the economic outlook at a Dallas Fed conference, and Treasury Secretary Henry Paulson is due to give an update on the U.S. economy and markets.
“The U.S. policy speeches are expected to provide a guideline on the U.S. Treasury/Fed’s combined quantitative easing strategy and the outlook for zero policy rates,” said Lena Komileva, an economist at Tullett Prebon.
Also released was a report from the Semiconductor Industry Association showing a larger-than-forecast slump in October sales; analysts at J.P. Morgan said a shortfall of unit sales was to blame, and pricing was above expectations.
Oil futures dropped $2.86 to $51.57 a barrel as OPEC decided to wait until a formal meeting in mid-December before making a decision on whether to cut production.
The U.S. dollar slumped 2% to 93.70 yen, though it rose slightly vs. the euro.
General Motors (GM), meeting ahead of a presentation to Congress on how they would use a government loan, is trying to get debt holders to swap their securities for equity, according to a report in The Wall Street Journal. GM shares traded nearly 3% lower in pre-market trade.
Conflicting reports came on Yahoo (YHOO). Britain’s Sunday Times reported that Microsoft (MSFT) is offering $20 billion for Yahoo’s search business, but the All Things Digital blog quoted sources as saying the purported deal was “total fiction.” Yahoo shares rose 3% in pre-open trade.
Mentor (MNT) jumped 88.5% to $30.51 after Johnson & Johnson (JNJ) launched a $1.1 billion, or $31 a share, takeover bid.
The Nikkei 225 dropped 1.4% in Tokyo and the FTSE 100 fell 2.5% in London.1:13pm 11/28/2008.
