Friday: Futures Tumbling, Stocks Look to Open Sharply Lower

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Look out!

Rumors that traders are picketing the

New York Stock Exchange

bearing signs that say, "Floyd Norris is right," are unfounded, but it looks like yet another Friday where the market would be better off closed. Dropping futures, lower bonds and global weakness are set to savage stocks.

"Down 130." That's how Jack Baker, head of trading at

Furman Selz

answered the phone this morning. Ever the bull, Baker sees the drop as a buying opportunity.

"To open down 100 and some-odd points, I'd have to be a buyer," he says. "I'm recommending buying them -- not on the first down tick, but buying them."

Over in the bond pits, there's a little head scratching over this morning's Treasury weakness.

"There's no one trade that can explain this meltdown," say Patrick Dimick, Treasury analyst at

UBS Securities

. "The catalyst was the dollar's drop overnight."

Dimick thinks that, with the dollar sending the Treasurys lower in Japan, London traders walked into their offices and saw a buying opportunity. They were wrong. Struggling to get on the other side of the U.S. bonds, they sent them even lower. Bad news for some people on Wall Street this morning.

"Those who went home long in New York got stomped on," says Dimick. "I think New York traders arrived and thought something was wrong with the data feed."

As with stocks, Dimick sees a lot of people stepping in to buy on that dip.

"We've seen very, very good buying," he says.

As of 9:00 a.m., the

S&P 500

futures are trading down 14.15, putting them more than 15 points below fair value. Stocks will see a sharp drop on the open. The 30-year Treasury bond is down 15/32 at 96 9/32, boosting the yield to 6.66%.

Shoulders are easing on both sides of the Atlantic on news that

British Telecom

(BTY)

have renegotiated their merger deal. Fear that the deal would fall apart on BT concern over MCI's recent earnings shortfall sent MCI down 6 1/8 to close at 30 9/16.

"The deal is going through," says on London trader. "Telecom's getting the deal a bit cheaper -- there's a lot of relief."

Under the new terms of the deal MCI shareholders will get 0.375 American Depositary Shares of the newly formed company and $7.75 for each share of MCI owned. Under the previous terms, they would have gotten 0.54 shares and $6.00. All in all, MCI is getting about 19% less than it would have in the original deal.

Phillip Morris

(MO) - Get Report

could come under pressure today on CEO Geoffrey Bible's admission that some people may have died from tobacco-related illnesses.

Widely followed

Merrill Lynch

chip analyst Tom Kurlak has downgraded

Intel

(INTC) - Get Report

from a short-term buy to a hold. (He maintained his long-term buy for the company.) Intel is trading at 91 7/8, down 6 1/2, on

Reuters Instinet

. As if things weren't bad enough.

Japanese blue-chips, and just about everything else, took it on the nose as negative sentiment and futures-led selling conspired to drop Tokyo's stock market to a 4-month low. The

Nikkei

fell 506.95, or 2.6%, to close at 18,650.17. With the bell near the bottom, things looks grim.

The selling continues on Hong Kong as well, where fears of a currency attack, and the attendant higher interest rates, weigh heavily on investors. Wall Street's drop and regional weakness lent a hand in dropping the

Hang Seng

224.28 to 15,429.75.

Falling bonds, a falling dollar and a falling Wall Street sent Frankfurt stocks reeling. The

Dax

closed down 167.66, or 3.9%, to close at 4086.01.

London is focused on the BT/MCI news.

"That is the volume of the London market," says one trader, adding that "the rest of the market looks horrible."

Indeed it does. If the

London Stock Exchange's

mother asked it if it would jump off a bridge just because everyone else jumped off a bridge, it would probably say, "Yes." Global weakness and soft gilt market is sending stocks lower. The

FTSE

is down 104.50, or 2.1 %, at 4873.50.