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Stocks headed toward a higher open Monday as investors grew upbeat over a report that Bear Stearns Cos. could fetch more money than the amount set in a buyout deal a week ago.
JPMorgan Chase & Co. was in talks to boost its offer for Bear Stearns to $10 per share from $2, according to The New York Times. The discussions were aimed at soothing Bear Stearns shareholders upset over the JPMorgan’s earlier offer, made at the behest of the Federal Reserve when the investment bank was near collapse.
While the Fed would need to sign off on any changes to the deal, any sign that Bear Stearns could fetch more than originally thought could help boost Wall Street’s mood. The session before the $2 offer arrived for Bear, the stock had finished at $30.
Bear Stearns ran into trouble with mortgage-backed securities and an evaporation of liquidity amid nervousness in the credit markets. Wall Street has faced concerns for months that troubles with soured debt and a lack of liquidity could take down banks.
Beyond the troubles of the financials, Wall Street will also be looking at the housing sector - the root of much of Wall Street’s current angst. A report expected from The National Association of Realtors on February’s sales of existing homes is expected to show sales fell compared with January, according to the median estimate of economists polled by Thomson Financial/IFR.
Dow Jones industrial average futures rose 65, or 0.53 percent, to 12,393. Standard & Poor’s 500 index futures advanced 9.30, or 0.70 percent, to 1,334.00. Nasdaq 100 index futures rose 9.80, or 0.56 percent, to 1,759.80.
The advance in futures follows a volatile but ultimately strong week for the markets. The Dow and the S&P each showed gains of more than 3 percent for the week, while the Nasdaq advanced more than 2 percent.
Bond prices fell Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.37 percent from 3.34 percent late Thursday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell 79 cents to $101.05 per barrel in premarket electronic trading on the New York Mercantile Exchange. Oil prices declined amid speculation that a slowing U.S. economy could damp demand.
In corporate news, Tiffany & Co. said loans it made to a diamond company weighed on its fourth-quarter profit, but that earnings excluding items were in line with Wall Street’s expectations.
Overseas, Japan’s Nikkei stock average slipped 0.02 percent. Markets in Europe and in Hong Kong were closed for Easter Monday.
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Mar. 17, 2008 (Thomson Financial delivered by Newstex) —

NEW YORK (AP) - U.S. stocks headed for a sharply lower open Monday as Wall Street and other global markets reeled from JPMorgan Chase (NYSE:JPM PRH) (NYSE:JPM PRX) (NYSE:JPM PRK) (NYSE:JPM PRJ) (NYSE:JPT) (NYSE:JPM) & Co.’s government-backed buyout of faltering investment bank Bear Stearns Cos. (NYSE:BSC)
Dow Jones industrial average futures fell 238, or 1.99 percent, to 11,746. Standard & Poor’s (NYSE:MHP) 500 index futures fell 30.80, or 2.38 percent, to 1,262.20, while Nasdaq 100 index futures fell 42.70, or 2.48 percent, to 1,681.80.
On top of supporting the buyout, the Federal Reserve took the extraordinary step of lowering the rate it charges to loan directly to banks just two days before its scheduled meeting Tuesday. The central bank lowered the discount rate by a quarter point to 3.25 percent.
The stunning implosion of Bear Stearns stirred fear among investors worldwide that other banks had sizable exposure to troubled credit markets. Stocks fell sharply in Asia and Europe and oil prices jumped to a fresh record.
JPMorgan said Sunday it would acquire Bear Stearns for $236.2 million in a deal backed by the Fed. JP Morgan will pay $2 per share, though Bear Stearns closed at $30 per share Friday.
Bond prices rose as investors rushed for safety. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.39 percent from 3.44 percent late Friday.
The dollar fell to a record low against the euro and hit a 12 1/2 year low against the yen. Meanwhile, gold prices jumped.
Light, sweet crude fell $1.29 to $108.92 per barrel in premarket electronic trading on the New York Mercantile Exchange. Oil prices rose to a high of almost $112 a barrel Monday.
Overseas, Japan’s Nikkei stock average fell 3.71 percent, while Hong Kong’s Hang Seng index fell 5.18 percent. In afternoon trading, Britain’s FTSE 100 fell 2.69 percent, Germany’s DAX index dropped 3.65 percent, and France’s CAC-40 lost 2.99 percent.
Bear’s buyout, while perhaps reassuring in that it didn’t result in a bankruptcy filing, was nonetheless an unwelcome development as it makes clear the extent to which credit markets are struggling to operate. The pain for investors in Bear Stearns, which succumbed to soured bets on now troubled mortgages for borrowers with poor credit, will be sizable. JPMorgan is acquiring Bear, including its midtown Manhattan headquarters, for about 1 percent of what the investment bank was worth little more than two weeks ago. The 85-year-old company has 14,000 workers worldwide.
The collapse of the world’s fifth-largest investment bank comes after a short-term bailout Friday that JPMorgan led and that the Fed backed. It was the first such intervention by central bankers since the 1930s.
In another unusual move, the Fed said it set up a lending option for big investment banks to secure short-term loans.
The market’s concern wasn’t limited to the Bear sale. DBS Group Holdings Ltd., a large bank based in Singapore, instructed traders via e-mail Monday to disregard an earlier e-mail barring new transactions with Lehman Brothers Holdings Inc. (NYSE:LEH) , according to Dow Jones Newswires. Earlier Monday, DBS emailed traders and said not to engage in new transactions with Lehman or Bear, according to two people familiar with the situation, Dow Jones reported.
Skittish investors sent Lehman shares down in early trading. The stock was down 11 percent in premarket electronic trading.
Wall Street’s worries about the financial sector come in a week in which the major investment banks are slated to report quarterly results. Investors will likely be focusing on comments from the companies for insights about their financial well-being.

via CNN