Before the bell: Futures higher as investors eye Bear Stearns news (BSC, JPM, BAC)
Posted by: in Latest NewsFiled under: Before the bell, International markets, Analyst reports, Deals, Market matters, JPMorgan Chase (JPM), Bank of America (BAC), Economic data, Commodities, Oil, Bear Stearns Cos (BSC)
U.S. stock futures were higher this morning as investors returned from a long weekend to news that JPMorgan might quintuple its bid for Bear Stearns. With the dollar edging higher, commodity prices lower along with Federal Reserve action, some might see Bear Stearns as the turning point to the credit crisis and anticipate it to turn around going forward.
Last week was a turbulent one on Wall Street. Wild swings shook the market, deepening the trend of the past two weeks. But at the end of it, stock markets ended higher with Thursday contributing to the positive finish. The Dow Jones Industrial Average rallied 261 points on Thursday to finish a weekly gain of 3.5%, the S&P 500 index rose 31 points Thursday for a total weekly gain of 3.3%, and the tech-heavy Nasdaq Composite gained 48 points, bringing the weekly increase to 2.1%.
Not much economic data is due out today, despite the week later being busy with economic releases. Today we start with a reading on February existing home sales, due out at 10 a.m. EDT. Since the housing crisis began, housing data is scrutinized more carefully with investors hoping to see the bottom at some point. The market expects yet another decline in existing home sales.
Overseas, Asian markets were mixed Monday, with Taiwanese shares soaring 4% following the weekend election. Japanese shares finished tiny changed on the day, but Shanghai saw its stocks sink again.
In Europe, markets are closed this day.
Meanwhile, the dollar rose against the yen and the euro on speculation the Federal Reserve’s interest-rate cuts and efforts to spur lending will help revive economic growth. Still, at the same time, oil prices fell for a third day to just over $100 a barrel on concern the slowing U.S. economy will curb demand. Also, as the dollar strengthened, demand for commodities as a hedge against inflation, may be reduced. Traders expect crude to drop to $90 a barrel this spring due to the economic slowdown.
The major corporate news this morning comes from JPMorgan Chase (NYSE: JPM) and Bear Stearns (NYSE: BSC). The New York Times reports that the former might quintuple its bid for the latter to $10 a share. BSC shares are up over 53% in premarket trading to about $9.15.
Staying with banks, Bank of America Corp. (NYSE: BAC) might write down $6.5 billion in the first quarter to cover potential losses in its home equity and mortgage portfolios, according to Punk Ziegel.
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