Stocks Head for Sharply Lower Opening

[March 13, 2008]  NEW YORK (AP) -- Wall Street headed for a sharply lower opening Thursday, following the example of markets around the world as the dollar continued its descent and worries about the U.S. economy reasserted themselves.

Markets in Asia and Europe took their cues from the performance of U.S. markets Wednesday, when Wall Street gave up its euphoria over a central bank plan to bail out the credit markets. The Dow Jones industrial closed with a moderate loss following its 416-point gain on Tuesday, but the decline was clearly a signal from U.S. investors was that they were no longer so sure the Federal Reserve plan to pump $200 billion into credit markets would fix the many problems in the U.S. economy.

Meanwhile Thursday, the dollar hit a 12-year low against the Japanese yen and also fell to another new low against the euro, which reached $1.56 for the first time. And oil prices, whose relentless ascent have fed inflation worries, remained at the $109 level but were expected to extend their own run into record territory.

That all sent global stocks reeling. In Japan, the Nikkei 225 index tumbled 3.3 percent Thursday to its lowest in 2 1/2 years. Markets in Europe were all down more than 1 percent.

Ahead of the opening in the U.S., Dow futures were down 159 points, or 1.3 percent, at 11,965, while Standard & Poor's 500 futures were down 19.60, or 1.5 percent, at 1,289.80 and Nasdaq 100 futures fell 24.2, or 1.4 percent, to 1,710.5.

Analysts in the United States noted Wednesday that the U.S. housing market remains in tatters, while inflation is a growing threat to consumer spending that is already showing signs of weakness. While the Fed's plan to make more money available to financial institutions can help, it won't solve the many deepening economic problems in the U.S.

The dollar's slide is of particular concern because it is helping to send commodities prices including oil to greater highs -- in turn feeding the growth of inflation.

The Fed's Open Markets Committee meets next Tuesday and is widely expected to lower interest rates, with many analysts forecasting a drop of 0.50 percentage point. However, in the past few weeks investors have been questioning whether another rate cut will also help the economy.

[Associated Press; By TIM PARADIS]

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