Stock futures plunge on swine flu, bank worries

Stock futures plunge on swine flu, bank worries

April 28th, 2009 by Associated Press in Local - Breaking News

By MADLEN READ

NEW YORK - Wall Street is set to open lower today on worries about the spread of swine flu and the viability of banks.

Concerns that swine flu could hurt industries such as travel and tourism are escalating after the World Health Organization said it is too late to contain the virus. The WHO raised its alert to a phase 4 out of 6, saying the flu spreads easily but is not pandemic.

Investors are nervous that banks' souring assets could also hinder the economy's recovery. The Wall Street Journal reported Tuesday that U.S. regulators told Bank of America Corp. and Citigroup Inc. the companies may need to raise more capital.

Regulators briefed officials at the 19 biggest U.S. banks on Friday about the "stress tests" they conducted on them, but are not planning to release the results publicly until May 4.

Ahead of the market opening, Dow Jones industrial average futures fell 122, or 1.5 percent, to 7,880. Standard & Poor's 500 index futures fell 15.70, or 1.8 percent, to 841.10, and Nasdaq 100 index futures dropped 19.25, or 1.4 percent, to 1,354.00.

Later Tuesday, the Federal Reserve will begin its two-day meeting on interest rates. The Fed has already lowered its target rate to a range of zero to 0.25 percent and started buying Treasurys in an effort to keep market rates low. Investors are curious about the central bank's assessment of the economy, and whether it will accelerate its purchases of Treasurys.

The swine flu on Monday gave investors reason to cash in recent gains, and the stock market pulled back moderately. The Dow remains up 22.6 percent, though, from the nearly 12-year low it reached in early March.

In overseas trading Tuesday, Japan's Nikkei stock average fell 2.7 percent. By midday in Europe, Britain's FTSE 100 fell 2.1 percent, Germany's DAX index fell 2.6 percent and France's CAC-40 fell 2.4 percent.

U.S. government bond prices edged higher.

The dollar was mostly higher against other major currencies. Gold prices fell.

Light, sweet crude fell $1.34 to $48.80 a barrel in electronic trading on the New York Mercantile Exchange.