Stocks are set to follow overseas markets lower on renewed concerns about the future of the auto and banking industries. About an hour before the opening bell on Wall Street, stock index futures indicate that the Dow Jones Industrial Average might fall more than 150 points in early trading. The NADSAQ is indicated 20 to 25 points lower.
Dow component General Motors (GM) fell 17 percent in overseas trading after the White House said plans submitted to receive billions more in government help were unacceptable. Officials suggest that some sort of "structured bankruptcy" might be the best solution for GM. The news comes after GM CEO Rick Wagoner announced plans to step down over the weekend.
President Obama is expected to make an official announcement related to the auto industry at 11:00 a.m. eastern time.
Meanwhile, bank stocks are likely to open lower after executives at both BofA (BAC) and JP Morgan (JPM) recently said business conditions had become tougher during the month of March. Overseas, UBS (UBS) announced plans to cut another 8000 jobs and Spain is taking over Caja Castilla-La Mancha--the country's first bank rescue in 16 years.
Pessimism ahead of Thursday's G-20 meeting is seen adding to the gloom. A communiqué released early indicates that there won't be another round of coordinated fiscal stimulus announced at this week's London meeting.
Japan's Nikkei lost 4.5 percent after a report on industrial production showed a 9.4 percent plunge in February. Hong Kong's Hang Seng fell 4.7 percent. Stocks were broadly lower across Europe, with a 3.1 percent drop in Germany's DAX pacing the decline.
Commodities are slipping. Crude oil fell $1.42 to $50.96 a barrel and gold dipped $9.9 to $915.40 an ounce.
With no economic news to guide the action, the flight-to-safety trade is giving bonds a lift. The benchmark ten-year Treasury is up 16/32nd and yields 2.7 percent.
The dollar fell .81 to 97.03 on the yen and the euro is down .0096 to 1.3192 on the buck.
Stocks fell and options volume slowed ahead of the weekend Friday. The Dow closed down about 150 points and 5.3 million calls and 4.5 million puts traded across the exchanges.
Some of the dry bulk shipping names bucked the bearish trend Friday. Dry Ships (DRYS) was one of them. Shares gained 75 cents to $5.86 and total options volume rose to twice the typical levels. 54,000 call options and 15,000 puts traded on the day. Most of the action was in the front month, with some bullish investors snapping up April calls at the 5, 6 and 7.5 strikes.
Bullish trading was also seen in Virgin Media (VMED), Novellus (NVLS), and Ashland (ASH).
MicroStrategy (MSTR) shares had a tough day. Shares finished down $3.62 to $34.15. There didn't appear to be any specific news headline to explain the sell-off in MSTR shares, but increasing options activity accompanied the move lower. Total options volume rose to 6X the average daily levels, with increasing activity seen in March puts at the $35 strike.
Bearish trading also surfaced in American Electric Power (AEP), Fidelity National Financial (FNF), and Intersil (ISIL).
Frederic Ruffy
WhatsTrading.com
