11:30AM Stock markets recovered from sharp declines. The Dow bounced into the positive.
U.S. market averages gained some ground after the initial sharp decline. The Dow bounced into the positive territory, helped by technology socks. Blue-chip stocks were led higher by Hewlett-Packard (HPQ: chart) and IBM (IBM: chart), each rising over 1%. Coca-Cola (KO: chart) was another notable gainer on the Dow with its shares moving up 1.4%. However, the broader market remained below the flat line amid concerns in the subprime mortgage market and global markets jitters. Fremont General (FMT: chart) plunged 20.4% after the company said it plans to sell its sub-prime residential real estate lending operations. Housing stocks were under pressure throughout the morning session amid continuous concerns about the outlook for the housing market. Meritage Homes (MTH: chart) and Beazer Homes (BZH: chart) were notable decliners, faling 5% and 4%, respectively. The disk drive, computer hardware, and brokerage sectors also traded in the red.

On the economic news front, the Institute for Supply Management said that the nation's service sector expanded at a slower pace than analysts expected. The ISM index gained only 54.3% in February, compared to expectations of 57% increase. In late morning trading, the Dow Jones industrial average was up 56.56, or 0.47%, at 12,170.55, having fallen 75 in earlier trading. The Standard & Poor's 500 index was up 2.79, or 0.20%, at 1,389.96, and the Nasdaq composite index rose 2.12, or 0.09%, to 2,370.12. Bonds were little changed, with the yield on the benchmark 10-year Treasury note at 4.50%, the same as late Friday.

U.S. service sector growth slowed more than expected in February.
Monday morning, the Institute for Supply Management released its report on business activity in the services sector in the month of February, showing that the pace of growth in the sector slowed more than economists had been expecting. The ISM said that its index of activity in the sector fell to 54.3 in February from 59.0 in January, although a reading of 50 or above still indicates growth in the sector. Economists had expected a more modest decline to a reading of 57.5. The bigger than expected slowdown in the pace of growth in the sector was partly due to slower new orders growth, as the new orders index fell to 54.8 in February from 55.4 in January. At the same time, the report also showed a faster pace of employment expansion, with the employment index rising to 52.2 from 51.7 in the previous month. Additionally, the report showed a slowdown in the pace of price growth, as the prices index slipped to 53.8 in February from 55.2 in January.


9:45AM U.S. stock markets opened sharply lower amid concerns about the sub-prime mortgage market.
Wall Street started trading sharply lower, reflecting rally in the Japanese yen, weakness across Asian and European markets, and growing concerns in the subprime mortgage market. Sub-prime lender New Century Financial (NEW: chart) slipped 57% after announcing that it is under investigation by federal regulators. Rival Fremont General (FMT: chart) slid 19% after the company said it will sell its subprime lending business after a proposed cease-and-desist order from the Federal Deposit Insurance Corp. HSBC Holdings plc (HBC: chart) erased earlier losses to gain nearly 1%. The world’s third-biggest bank said it will take a charge of $10.57 billion, mostly on the bad loans in the subprime sector. It also reported a 5% annual profit increase on emerging markets growth and lifted its dividend.

The Dow was led to the downside, by aluminum producer Alcoa (AA: chart), down 2.78% and broker J.P.Morgan Chase (JPM: chart), down 1.8%. In merger-and-acquisition news, Aeroflex (ARXX: chart) agreed to be acquired by private-equity firms General Atlantic and Francisco Partners in a deal worth $1 billion, or $13.50 in cash. The bid represents a 23% premium to Friday''s closing price of $11.01. Aeroflex’s shares surged over 19%. In another deal, Supermarket operator Great Atlantic & Pacific Tea agreed to buy smaller rival Pathmark Stores Inc. (PTMK: chart) for $1.3 billion in cash, stock and debt. Shares of Pathmark rose 10.2%.

Among the most notable market movers, Palm Inc. (PALM: chart) fell 7.4% in early trading after it rallied 11% Friday on bid speculation. Cirrus Logic Inc. (CRUS: chart) gained 1%, recovering from pre-market weakness. The company said it expects to restate results for 2001 through 2006. In the first hour of trading, the Dow Jones industrial average was down 42.86, or 0.35%, at 12,071.24. The Standard & Poor''s 500 index was off 9.00, or 0.65%, at 1,378.17, and the Nasdaq composite index fell 18.51, or 0.78%, to 2,349.49. Bonds were little changed, with the yield on the benchmark 10-year Treasury note at 4.50%, the same as late Friday.


9:30AM London equities tumbled heavily Monday tracking weak global markets.
The UK market was lower on Monday. By midday the FTSE 100 was 1.5% lower at 6,027.7, a loss of 89 points.

Advancers

There was some upside despite the carnage. HSBC, London largest-listed bank, reported a 5% rise in pre-tax profit of $22.1 billion. Shares in the company traded 0.9% higher. News that Royal & Sun Alliance completed its exit of the US insurance market on time went down well, sending its shares up 1.2%. Countrywide is also strong, up 3.8%, on reports that a bidding war is possible for the largest estate agent in the UK, as private equity group 3i mulls a counter bid.

Decliners

Resource stocks declined sharply in line with entrenched concerns that the sell-off would undermine demand for metals in emerging economies. Copper prices fell by about 4% on commodities exchanges. Vedanta Resources was 3.5 % weaker with Kazakhmys down 3.3% and Xstrata 4% lower.

Weaker crude prices pressured oil large-caps. BP lost 1.5%, Royal Dutch Shell was 0.6% lower. Cairn Energy lost 4.6%, lifting the prospect of its relegation from the large-cap index as tomorrow’s deadline nears.

Man Group, the largest listed hedge fund in the world, saw its shares track global equities markets lower with a 3.6% fall. British Airways, usually a beneficiary of lower crude prices, fell 8% after it told investors the disposal of its BA Connect regional jet business would cost an extra 20 million pounds.


9:15AM Strong yen and heavy losses for New Century Financial weighed on pre-market sentiment.
U.S. stock futures pointed Monday to a lower opening for another straight session, with the yen posting strength and thus hurting hedge funds. Worries over the health of the U.S. second-biggest subprime lender, New Century Financial (NEW: chart), also generated negative sentiment. Company''s stock tumbled 57% in the pre-open after it said it is a target of a federal criminal probe and is likely to breach a major lending covenant with its financial backers. In corporate news, Research in Motion (RIMM: chart)said its chairman and co-CEO is stepping aside as the BlackBerry maker plans to restate results, cutting earnings by up to $250 million dating to fiscal 2004 because of incorrect dates over stock option grants. S&P 500 futures dropped 10.5 points at 1,375.30 and Nasdaq 100 futures dropped 16.75 points at 1,709.50. Dow industrial futures dropped 90 points.


9:00AM Asian markets ended sharply lower Monday with Japan leading decliners.
Asian markets finished lower on Monday. Japanese Nikkei 225 Index fell 3.34% to 16,642.25. Exporters fell amid a surge in the yen, which erodes overseas earnings when repatriated to Japan. The dollar fell to 115.70 yen from 116.75 yen late Friday in New York. Canon shed 2.08%, Toyota Motor fell 3.24% and Sony was down 2.92%.

Hong Kong declined 4% to 18,664.88. Investors are worried about the possibility of further falls to come. Shares of HSBC fell 2.5% ahead of its earnings results, which the company issued after the market closed. Among other large-caps, China Mobile dropped 6%, Hutchison Whampoa fell 3% and China Construction Bank sank 4.9%. The Shanghai Composite Index fell 1.6% at 2,783.31.