(By Salman - iStockAnalyst Writer)
US stock futures dropped on Monday as recession fears continued to spook the investors. Dwindling corporate profits, bleak outlook and possibility of further job cuts also weighed upon market sentiment.
At 8:31 am ET, Standard & Poor's 500 Index futures expiring in December fell 7 points to 854.50. Dow Jones Industrial Average futures dropped 68 points to 8303. Nasdaq Composite Index futures shrank 6.25 points to 1149.25.
A release on Monday showed New York Empire State Index index fell to a record low of -25.4 in November from 24.6 in October. The index is a gauge of manufacturing activity in the region.
A survey by National Association for Business Economics survey of 50 professionals indicated that the U.S. economy is already in recession and is set to contract at a faster pace of 2.6% in the fourth quarter, extending the decline into early 2009.According to the survey, the unemployment rate was likely to peak at 7.5% by the third quarter of 2009. NABE President Chris Varvares said in statement "Business economists became decidedly more negative on the economic outlook for the next several quarters as a result of the intensification of credit market stresses and evidence of spillover to the real economy."
Early on Monday Citigroup (NYSE: C) announced that it is plans to slash about 50,000 jobs in the near-term and to cut expenses by 20%. According to a separate report by UK Telegraph, J.P. Morgan Chase & Co. (NYSE: JPM) is planning thousands of job cuts globally.
Genworth Financial, (NYSE: GNW) announced that it has acquired InterBank, the Maple Grove, Minn.-based bank and has applied to the U.S. Office of Thrift Supervision to enable it to become a savings-and-loan-holding company, and it applied to participate in the U.S. Treasury's Capital Purchase Program under the Troubled Asset Relief Program. The community bank has about $1 billion in assets.
Meanwhile, Goldman Sachs Group Inc. (NYSE: GS) spokesman Lucas Van Praag announced that CEO Lloyd Blankfein and six other top executives at the bank will not be receiving cash or stock bonuses for 2008. The decision was made by the seven executives themselves "because they think it's the right thing to do."
Retailer Target (NYSE: TGT) said on Monday that its third quarter profit dropped 24% to $369 million or 49 cents a share from $483 million or 56 cents in the third quarter of 2007.Revenue rose to $14.6 billion from $14.3 billion in the same period.
Mooresville, North Carolina-based Lowe's Cos. (NYSE: LOW) reported that its net income in the third quarter fell 24% to $488 million, or 33 cents a share, from $643 million, or 43 cents, in the same quarter, a year ago. Revenue climbed 1.4% to $11.7 billion. The retailer also lowered its forecast for the full year.
In the G-20 summit called in Washington over the weekend, leaders said they agreed a broader policy response is needed to combat the current global economic crisis, based on "closer macroeconomic cooperation." A communiqué adopted at an emergency G20 summit in Washington said "No single nation will be able to fix this crisis, but with continued cooperation and determination, it will be solved as long as we are steadfast in our commitment to reforming our financial sectors and maintaining free and open markets," the document said.
A release by Cabinet Office on Monday showed Japan, the world's second largest economy, entered into first recession in eight years after it shrank 0.4% in third quarter. Economists had expected the data to show a marginal rise in GDP. Earlier, in second quarter it contracted a revised 3.7%. The last time Japan's economy fell in recession was in 2001.
On the front of economic data, Capacity Utilization and Industrial Production figures are due at 9:15 am ET.
European stocks were mostly lower in afternoon trade. At 13:12 London time, the U.K. FTSE dropped 61.44 points or 1.45% to 4,171.53. The German DAX and French CAC fell 1.81% and 1.73% respectively.
Asian stocks finished mixed on Monday. The Nikkei 225 finished at 8,522.58, up 60.19 points or 0.71%, after hitting a two week low of 8,218.82. Hong Kong's Hang Seng Index fell 13.13 points or 0.1% to 13,529.53.
