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US Stock Futures Points to Lower Opening

Published on November 6, 2008

US Stock Futures Points to Lower Opening

November 6, 2008

Bank of England cuts benchmark interest rate by 1.5% to 3.0% and says “significant” cut needed to meet 2% target, revised down inflation outlook. Dow futures are down triple digit, not a good sign. Generally after a 90% down days one can expect short term rallies and that’s not what market is saying, at least as of this writing. Elsewhere in Asia, markets closed sharply lower (5-7%) across the region.

In reaction to strong earnings/guidance: CVTX +13.4%, WFMI +13.0%, HOTT +12.3%, ATVI +9.4%, BJ +8.2%, EP +6.1%, SUN +4.6%, EGLE +4.6%, MBLX +4.1%, BCS +6.9%, amongst the pre-market losers, LVS and MDR both > -20%. 

According to briefing.com- Analysts at Morgan Stanley slashed their earnings estimate for Goldman Sachs (GS). Persistent uncertainty in financial markets and a clouded economic outlook have resulted in lower earnings expectations for many firms, and has also led to mounting job cuts on Wall Street.

Recent reports indicate Goldman Sachs has informed some 3,200 employees, or 10% of its workforce, they will lose their jobs. Meanwhile, Bloomberg.com reported Citigroup (C) has begun notifying some of the 9,100 employees, or 2.6% of its workforce, whose jobs will be eliminated.

Jobless claims for the week ending November 1 totaled 481,000, marking a 4,000 decrease from the prior week’s upwardly revised claims number. The latest figures also exceeded the 477,000 claims that were widely expected.

In other economic news, preliminary third quarter nonfarm productivity was up 1.1%, exceeding the 0.7% increase that was widely expected. Nonfarm productivity increased at a 3.6% rate in the prior report. Meanwhile, a preliminary reading of unit labor costs indicated a 3.6% increase, which is more than the 3.0% increase that was widely expected. Unit labor costs contracted by 0.1% for the prior reading.

I think the key support area to watch is rent a car bulgaria8.9K for DOW and if that’s gone, it seems likely that we are about to retest Oct lows.

Profitable Trading, OP

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