- The Washington Times - Thursday, September 18, 2008

NEW YORK (AP) – U.S. stocks headed for a higher open Thursday after the previous session’s massive rout, but safe assets such as gold and Treasury bills still saw heavy demand as investors braced for more instability in the financial system.

Following the bailout of insurer American International Group Inc., the Federal Reserve and other major central banks around the world on Thursday joined forces to inject as much as $180 billion into global money markets in an attempt to keep the credit crisis from worsening. The Fed added another $55 billion in overnight loans Thursday.

But fears have not abated. Trading is apt to be volatile as market participants try to figure out how to proceed in what is looking to be the most troubling period for the world’s financial system in most investors’ memory.

The big fear on Wall Street is that there are more significant financial companies to fall. Speculation is swirling about the futures of such major players as thrift bank Washington Mutual Inc. and investment bank Morgan Stanley. Media reports have been saying that Wells Fargo & Co. and Citigroup Inc. are interested in a possible takeover of Washington Mutual, and that Morgan Stanley and Wachovia Corp. are in talks about a possible combination.

After a giant loss on Monday, a rebound on Tuesday, and then another plunge on Wednesday, stock futures were moderately higher ahead of Thursday’s opening bell.

Dow Jones industrial futures rose 63, or 0.59 percent, to 10,727. Standard & Poor’s 500 index futures rose 12.10, or 1.04 percent, to 1,175.00. Nasdaq 100 index futures rose 18.00, or 1.09 percent, to 1,665.00.

Monday’s 504-point loss in the Dow was its biggest drop since the drop following the September 2001 terror attacks. The blue-chip index is now about 24 percent below its Oct. 9, 2007, record of 14,164.53.

On Wednesday, the 3-month Treasury bill considered one of the safest short-duration assets saw demand surge so high that its yield briefly dipped into negative territory for the first time since 1940.

In early trading Thursday, the prices for short-duration Treasurys dipped from Wednesday’s levels. But the yield on the 3-month T-bill was still extremely low at 0.12 percent up from 0.02 percent late Wednesday, but well below its yield of 1.60 percent just a week ago.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.45 percent in early Thursday trading from 3.42 percent late Wednesday.

Gold, another safe haven, rose further on Thursday, after posting their largest one-day price jump ever on Wednesday.

Oil is not considered as safe as gold but it, too, has been drawing investors who deem it safer than stocks. Light, sweet crude for October delivery on the New York Mercantile Exchange rose $3.87 to $101.03 a barrel in electronic premarket trading, after rising by more than $6 a barrel on Wednesday.

The dollar fell against most other major currencies.

In economic data, the Labor Department reported that initial claims for unemployment benefits rose by 10,000 last week to 455,000, due primarily to Louisiana’s job losses from Hurricane Gustav.

Later in the morning, the Conference Board releases its August index of leading economic indicators.

In earnings news, FedEx posted a 22 percent decline in quarterly earnings, as the package deliverer cost cuts to offset slowing global growth. The fiscal first-quarter results came in as expected. The company projected earnings of $1.40 to $1.60 per share for its fiscal second quarter.

Overseas, Japan’s Nikkei stock average dropped 2.22 percent to its lowest closing level in over three years. Hong Kong’s Hang Seng index lost 0.03 percent.

In afternoon trading in Europe, Britain’s FTSE 100 rose 0.88 percent, Germany’s DAX index rose 0.52 percent, and France’s CAC-40 rose 0.65 percent.

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