By TIM PARADIS, AP Business Writer
46 minutes ago
Wall Street was expected to plunge at the opening of trading Tuesday, extending its huge losses from last week and taking more cues from heavy selling that has spread throughout the world. Indicators showed the Dow Jones industrial average was set to fall by more than 500 points when trading begins.
Fears of a recession in the United States that could pull down the global economy as well have infected markets around the world, and those declines further unnerved U.S. investors who were unable to trade Monday, when Wall Street was closed for Martin Luther King Jr. Day.
Dow futures fell 553, or 4.57 percent, to 11,553. Standard & Poor's 500 index futures fell 67.20, or 5.07 percent, to 1,258.10. Nasdaq 100 index futures dropped 86.50, or 4.68 percent, to 1,763.00.
In Asia, Japan's Nikkei stock average closed down 5.65 percent — its biggest percentage drop in nearly a decade. Hong Kong's Hang Seng index lost 8.65 percent a day after showing its biggest losses since the Sept. 11, 2001, terrorist attacks.
In afternoon trading, Britain's FTSE 100 fell 0.69 percent, Germany's DAX index lost 2.55 percent and, France's CAC-40 fell 1.39 percent.
Some of the more modest moves in major global indexes Tuesday belie the huge drops many saw Monday.
A big question on investors' minds is whether the Federal Reserve, scheduled to meet next week, will make an emergency interest rate cut before then. Traders outside the U.S. were pondering whether other central banks would step in with interest-rate cuts to help shore up market sentiment.
Last week, each of the major U.S. indexes fell more than 4 percent as investors grew skeptical late in the week that plans by U.S. lawmakers and President Bush to stimulate the U.S. economy will keep the U.S. from tipping into recession. The plan Bush announced Friday, which requires the OK of Congress, outlines $145 billion in tax relief to help spur consumer spending.
Bond prices rose sharply as investors searched for safety amid the global stock pullback. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.49 percent from 3.63 percent late Friday.
The dollar was mixed against other major currencies.
Corporate news weighed on stocks as well as concerns about the widespread pullback in stocks.
Bank of America Corp. said its fourth-quarter earnings fell sharply amid credit losses and weak investment banking results. Profits at the bank declined to $268 million, or 5 cents per share, from $5.26 billion, or $1.16 per share, a year earlier.
Meanwhile, Wachovia Corp. said its fourth-quarter earnings fell 98 percent after the bank wrote down $1.7 billion in the value of certain portfolios and set aside $1.5 billion to cover bad loans. Earnings fell to $51 million, or 3 cents per share, from $2.3 billion, or $1.20 per share, a year earlier.
There was some good news. DuPont, one of the 30 stocks that make up the Dow industrials, said its fourth-quarter profits fell 37 percent from a year ago when earnings benefited from one-time items. Earnings fell to $545 million, or 60 cents per share, from $871 million, or 94 cents per share, in the year-ago period. But excluding items, results topped Wall Street's expectations amid strength in its international business.
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On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
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