U.S. Futures Reverse, Suggest Down Open
09/16/08 - 08:43 AM EDT
Mike Taylor
Updated from 6:55 a.m. EDT
Premarket futures were suggesting another down open for stocks in New York Tuesday following a slew of credit-ratings downgrades for trod-upon investment firm AIG (AIG Quote - Cramer on AIG - Stock Picks). Futures for the S&P 500 were down 10.7 points at 1185.4, which is about 8 points below fair value. Nasdaq futures down 8.3 points at 1713, which is 1.3 points below fair value. During trading on Monday, bad news from Lehman Brothers (LEH Quote - Cramer on LEH - Stock Picks), Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) and AIG (AIG Quote - Cramer on AIG - Stock Picks) sent the market plunging. The three major indices each lost at least 3%, and the Dow Jones Industrial Average staged its worst one-day drop in seven years. On Monday, Lehman filed for bankruptcy protection after failing to find a partner willing to take on its subprime exposure. Lehman's bankruptcy is the largest in U.S. history in terms of assets held before the filing. Also struggling with bad assets and fears that it may go the way of Lehman, Merrill agreed to be bought by Bank of America (BAC Quote - Cramer on BAC - Stock Picks) for $50 billion. Meanwhile, AIG, whose balance sheet is crippled by its sale of insurance on subprime-related securities. The company's credit ratings were lowered late Monday by S&P, Moodys and Fitch. Ahead of the new day's trading, investment bank Goldman Sachs reported a 71% drop in third-quarter profit but it still beat Wall Street earnings estimates. Goldman has seemed exceptionally sturdy compared with its peers in the deeply troubled sector. Best Buy (BBY Quote - Cramer on BBY - Stock Picks), however, fell short of Wall Street's expectations as its fiscal second-quarter profit declined 19% from a year ago.
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