09:45AM Wall Street opened lower, weighed down by credit markets concerns.
Stocks opened in the negative Friday, continuing the downward trend set yesterday when U.S. equities saw the second-biggest decline this year. Concerns about the worsening climate for financing corporate takeovers and about subprime mortgage markets continued to weigh. Economic news of robust economic growth in Q2 failed to offset the decline and the enthusiasm over it was only shortly lived. The Commerce Department said GDP rose 3.4%.
In positive earnings news, oil company Chevron (
CVX: chart) posted better-than-expected 24% earnings increase in Q2 on higher gasoline prices. The stock gained 0.4%. Fortune Brands (
FO: chart) posted 6% decline in Q2 profit, but the results beat expectations. The stock rose 2.8%. ITT Corp. (
ITT: chart) posted Q2 profit jump of 52% to $1.16 a share, from 75 cents a share a year ago, beating expectations. The stock was down 0.5%.
Energy companies posted the most notable declines, with shares of Exxon Mobil (
XOM: chart) falling 1.5%. One of the biggest drags on the Dow was Caterpillar (
CAT: chart), down nearly 1%. In corporate news, Medtronic (
MDT: chart) lost 0.6% after it agreed to buy Kyphon (
KYPH: chart) for $3.9 billion.
The Dow Jones industrial average was down 55.35 points, or 0.41%, at 13,418.22. The Standard & Poor''s 500 Index was down 7.45 points, or 0.50%, at 1,475.21. The Nasdaq Composite fell 15.32 points, or 0.59%, at 2,584.02.
9:00AM U.S. stock futures pointed lower, despite strong economic growth in Q2.
U.S. stock futures were pointing lower Friday, despite data showing better-than-expected gross domestic product and a drop in core inflation in Q2. The Commerce Department said that the U.S. economy was strong in Q2 as the drag from the housing sector lessened. GDP advanced 3.4%, slightly higher than the 3.3% growth expected by economists. However, although the GDP indicates a healthy economic growth, it also reduces the possibility of interest-rate cuts before the end of the year.
Among the few major companies posting quarterly results Friday, U.S. oil company Chevron (
CVX: chart) posted better-than-expected 24% earnings increase in Q2 on higher gasoline prices. Pharmaceutical company Amgen (
AMGN: chart) also reported a stronger-than-forecast profit rise. Medco Health Solutions (
MHS: chart) lifted its 2007 profit outlook after reporting a 26% profit increase.
In merger-and-acquisition news, Medtronic (
MDT: chart) agreed to buy Kyphon (
KYPH: chart) for $3.9 billion, or $71 a share, a 32% premium to Kyphon''s close on Thursday. Kyphon surged 27% in pre-market trading.
S&P 500 futures fell 8 points at 1,479.90 and Nasdaq 100 futures dropped 7 points at 1,994.00. Dow industrial futures dropped 69 points, retreating from the second-biggest drop this year. On Thursday, Dow Jones industrials dropped as much as 450 points before closing with a deficit of 311 points.
8:30AM New York – Asia and emerging markets suffer the heaviest loss since late February.
Asian markets declined following decline of 2.3% in the U.S. and 3% decline in the European markets. Japan, the largest market in the region, fell 2.3% mirroring losses on Wall Street.
Taiwan led the region with a loss of 4.22% followed by 4.09% decline in Korea. Philippines dropped 3.9%, India declined 3.4%. Hong Kong, Australia, and Indonesia fell 2.8%. Singapore and Thailand dropped 2.4%.
Asian markets have been in the upswing the last five weeks with several markets trading at record levels. India and Philippines have traded at elevated levels on domestic economic strength; South Korea on rising exports and strong commodities prices have lifted Indonesia to a new highs.
Markets in Shanghai had run up 11% in the last five trading sessions and failed to participate in the current sell-off. Chinese government has raised interest rates on bank deposits, tightened the lending rules for real estate but investors continue to pour money into local stocks markets. In the month June, China reported daily new stock trading accounts opening near record level.
Australia fell 2.76% on weak metal prices and worries that strength is currency may affect commodity exports. New Zealand lost 1.8% after its strong currency came under heavy pressure faced by unwinding of yen carry trades.
Emerging markets in Asian reflected similar losses in South America and Europe. Brazil lost nearly 4% and Mexico dropped 3.6% on a day when stock markets around the world got clobbered. Turkey dropped 4.2% leading the global markets rout on Thursday and dropped another 1.35% at the end of the mid-day session today.
