Before the bell: Stocks set to plunge on stimulus package, auto sector worries
President Obama is reportedly going to sign into law a $787 billion economic stimulus package, which is said to be the most ambitious and massive plan in decades. It should help jump start the economy with infrastructure spending, tax breaks and more. It should also help create jobs and invigorate consumer spending. But Wall Street is concerned about the success of the plan, fearing it offers too little, too late.
Meanwhile, investors are also concerned about the auto industry and whether it can be saved. With the administration saying, "any plan to shore up the auto industry will need to require sacrifice by all involved," investors are worried what the sacrifices entail, and how to avoid contagion so that the troubles won't spread further into the economy. General Motors (GM) and Chrysler LLC are expected to submit plans to the government today to show how they can repay billions in loans and become viable. Of course, abysmal auto sales haven't been helping any company in the industry.
Overseas, Asian stock markets fell sharply Tuesday. News of deepening recession in Japan (it contracted an annualized 12.7 percent during the fourth quarter of last year), as well as renewed financial fears, had Asian markets tumbling, but that wasn't all. European shares also slid in early trading on more financial concerns out of Britain as well as Moody's rating agency announcement that banks with exposure in hard-hit Eastern Europe could see their ratings pressured.
It is not surprising that the dollar strengthened against most major currencies -- especially the euro, which was also hurt by exposure to Eastern Europe. Meanwhile, spot gold breached $960 an ounce in Tuesday's session and oil prices declined to near $37 a barrel on continued dismal global economic news and rising supplies and inventories, which offset expectations of further OPEC production cuts.
On the economic front, February Empire State Manufacturing -- a survey from New York area manufacturers -- will be released at 8:30 am. Also, the National Association of Home Builders will report its February numbers. Finally, St. Louis Fed President James Bullard will deliver a speech at 1:00 pm.
Stocks in the news: GM, WMT, TRMP, VZ, SIRI, MSFT, TEVA, AMZN