The market looks like it will start the week on a tentative note after last week's plunge. With futures off their earlier highs, initial signs of some buying pressure have been pretty much deflated.
At 8:58 a.m. EDT, the
S&P 500 futures were down 2.0 points, just about 4 points below fair value and indicating a lower open. The
futures were down 22.50 points, indicating some possible selling pressure at the open.
"I think we are going to see the market open down accompanied by a lot of fear," said Todd Clark, head of Listed Trading at
W. R. Hambrecht
"I have been looking at the ratio of puts to calls, which is moving up over 100. So far there is not enough evidence of a lot of fear out there, which we need before we see this thing turn around. I'm expecting something really scary today," he added.
The big bottom question is looming over Wall Street this morning after the Nasdaq had its worst week in history last week. Investors who rode the high-technology wave and saw their holdings plummet last week probably don't have the heart to get in on this "dip" quite yet, and prevailing sentiment is that the "game" has changed fundamentally. In fact, many investors may be fresh out of cash.
Some market-watchers say the technology into which investors have been pouring money actually allows excesses to be wrung out of markets in less time, shortening corrective cycles. But who is to say how much excess remains to be wrung out and exactly how many days or weeks that will take? It took the Dow nearly a year to recover from the 1987 crash. More recent swoons have typically taken six months or more.
"I'm not looking at any kind of price bottom. It's human nature, it's more of a behavioral thing," said Clark.
The bulk of the downswing may have already happened, and
after-hours trading saw some of the battered large-cap techs bouncing back on Friday, with
ending up after volatile trading. Others fared less well.
It still remains to be seen how the market will respond to what are expected to be spectacular earnings reports from some companies. Last week's were not enough to break the market's free fall, possibly because they only served to remind investors how fat spreads between earnings and valuations are. While valuations have historically been close to 30 times earnings, some of the tech companies out there have valuations of 100-300 times earnings.
In any case, the list of earnings slated to come out this week is far meatier than last week's.
Today, we will hear from, among others,
The bond market continued to give back recent gains but had come off earlier lows, and the 10-year note was down 6/32 to 104 16/32 and yielding 5.887%. Meanwhile, no major data are in the pipeline today.
The large European bourses were
sinking near midsession. The Paris
had dropped 148.83 to 5916.88, while Frankfurt's
was 180.76 lower to 7034.07. Across the channel, London's
was off 245.3 to 5932.8.
The euro was trading down to $0.9571
Asian bourses panicked after Friday's plunge on the Nasdaq and Dow, and several of them had their worst days ever. Foreign investors were the first to be blamed in Japan for the dumping of technology stocks. Many traders said the foreign selling had been going on for four straight weeks and is expected to continue until they make up for some of their losses made in the U.S. markets. In Tokyo, the
had its largest intra-day point loss in a decade, closing down 1,426.04, or 7.0%, to 19,008.64. Tokyo's
small-cap index shed 10.57, or 12.1%, to 76.64. Hong Kong's
index slumped 1380.39, or 8.55%, to 14762.37, while South Korea's
fell 93.17, or 11.63%, to 707.72. Only Taiwan closed higher, its
finishing up 126.88, or 1.43%, to at 8993.68.
Meanwhile, the dollar fell more than 2 yen when officials from the
Group of Seven
, who met this weekend, did not mention the need for a weaker yen. Japanese exporters would like to see the yen weaken since a strong currency makes their products more expensive overseas, thus cutting off major profits as consumers seek out cheaper products. The dollar closed at around 103.65 yen. The greenback hasn't strayed far from that number and was lately sitting at 103.62 yen.
For a look at stocks in the preopen news, see Stocks to Watch, published separately.