Ahead of today’s trading on Wall Street, futures indices are slightly down following Caterpillar’s warning about deteriorating business conditions, which has heightened investors’ fears of a recession.
The Dow Jones futures index was down 18 points around 2:30 PM, while the Nasdaq index was up 0.25 points. The S&P futures index, on the other hand, was down 0.4 points and below fair value, a mathematical formula used to determine prices considering interest rates, dividends, and the expiration date of the futures contract. Prior to Caterpillar’s announcement, the Dow Jones futures index was up more than 40 points, primarily due to the news that Pfizer, the world’s largest pharmaceutical company, is acquiring competitor Wyeth for $68 billion. However, after Caterpillar announced that it would achieve significantly lower profits this year compared to last year and announced the layoff of 20,000 workers, market sentiment changed abruptly. The stock price of the giant agricultural machinery manufacturer plummeted more than 12 percent. In European markets, however, stock prices rose today. Around 2:30 PM, the London FTSE and Paris CAC indices were up more than 1 percent, while the Frankfurt DAX index was up 0.5 percent. (H)
