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Wall Street set for further losses on recession worry

Wall Street set for further losses on recession worry
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First Published: Fri, Aug 19 2011. 05 38 PM IST
Updated: Fri, Aug 19 2011. 05 38 PM IST
New York: The S&P 500 stock index on Friday was likely to extend its 4.5% decline of the previous session as concerns mount the US economy may slip back into recession.
An absence of economic data and corporate earnings news will shift attention to technical analysis, with last week’s S&P low near 1,100 in focus.
US futures followed declines in Asian and European markets, the latter falling near 2-year lows on concern over the health of the banking system.
“This fear that there’s going to be some widespread problem with banks is pressuring stock prices,” said Robert Pavlik, chief market strategist at Banyan Partners LLC in Palm Beach Gardens, Florida.
“Technical levels are what market participants are focused on now,” he said. “The next level of support (on the S&P) is around 1,120, which we will probably go through, then down to 1,100.”
S&P 500 futures fell 16 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract.
Dow Jones industrial average futures lost 162 points and Nasdaq 100 futures dropped 22.5 points.
The worsening economic outlook helped lift spot gold to a record high of $1,877 an ounce as investors reached for safety.
Shares in the energy sector could be among the worst hit as US crude futures dropped more than 3% to $79.85 per barrel.
Bank of America is cutting 3,500 jobs this quarter according to an internal memo, as the biggest US bank grapples with its $1 trillion problem-loan portfolio and growing economic concerns. Shares fell 2.3% to $6.85 in premarket trading.
Hewlett-Packard Co slid 13.9% to $25.40 a day after it said it may spin off its PC business, the biggest in the world, and cut its outlook.
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First Published: Fri, Aug 19 2011. 05 38 PM IST
More Topics: Markets | Wall Street | S&P | US stocks | Oil |