FOX Business: The Power to Prosper
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U.S. stock futures plunged, extending a deep global selloff and flight to safety, amid renewed worries little can be done to keep the global economy from veering off course.
With global markets and U.S. stock futures in selloff mode, traders raced into safe-haven assets. The yield on the 10-year Treasury sunk to 1.794% from 1.868%, and the rate on German bunds, a European safe-haven, fell sharply as well.
The Federal Reserve moved to lengthen the maturity of its balance sheet, an indirect bid to stimulate the economy, at its meeting that concluded on Wednesday as was widely anticipated. The $400 billion scope of the "twist" from short-term to longer-term Treasuries was, however, modestly broader than many economists had been anticipating, according to a research note from Goldman Sachs.
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However, the Dow plunged 284 points in less than two hours after the decision that was dubbed "Operation Twist" was announced, in a sign that many market participants are wary that the central bank won't be able to reinvigorate a stalling economy.
"A downbeat outlook for the economy combined with the so-called ‘Operation Twist’ economic stimulus not going far enough in many people’s eyes," David Jones, chief market strategist at IG Index, a London-based trading firm, wrote in a research note.
Weekly claims for unemployment benefits fell to 423,000 last week from a revised 432,000, higher than the 420,000 economists forecast. The number of initial jobless claims have been hovering about the 400,000-mark for weeks -- yet another sign of struggles in the jobs market, a crucial component of broader growth.
Adding to the malaise on Thursday was data from the euro zone and China pointing to continued contraction in manufacturing in both major global economies.
"The monetary measures (unveiled by the Fed), along with Obama’s fiscal package announced earlier this month ... could kick-start the economy," Gavan Nolan, director of credit research at Markit, a risk analysis firm, wrote in a research note.
"But there is a legitimate fear that both monetary and fiscal policy has been too timid and the new measures will be ineffectual."
The euro took a beating in early trading, tumbling 0.8% against the U.S. dollar, while the greenback leaped nearly 1% against a basket of world currencies.
Energy markets sold off as well as a result of increased fear that a weakening economy will stunt demand and a considerably stronger dollar. Light, sweet crude fell $2.69, or 4.3%, to $82.23 a barrel. Wholesale RBOB gasoline dipped 9 cents, or 3.3%, to $2.58 a gallon.
Gold plunged $49.90, or 2.7%, to $1,759 a troy ounce.
UTX Technologies (UTX) unveiled plans to acquire airplane-part maker Goodrich for $16.4 billion in cash -- a 16% premium to Wednesday's closing price and 47% higher than the price before news initially leaked last Thursday.
FedEx (FDX) posted quarterly profits that topped Wall Street's estimates by a penny, but slashed its full-year outlook, sending shares lower.
Honeywell (HON) said its expects its third-quarter earnings to come in at the high end of its forecast of 96 cents to $1.01 a share.
The English FTSE 100 plunged 4.5% to 5,049 and the German DAX slumped 4.3% to 5,202.
In Asia, the Japanese Nikkei 225 sunk 2.1% to 8,560 and the Chinese Hang Seng shed 4.9% to 17,912.