After moving sharply lower at the open, stocks have regained some ground over the course of morning trading on Friday. The major averages have moved well off their worst levels of the day, although they continue to post steep losses.
The initial weakness in the markets came as traders reacted to news that Dubai World, the main investment arm of Dubai, has requested to postpone payment on nearly $60 billion in debt. The news raised concerns about the potential impact of a default by the company.
The news contributed to substantial weakness in the Asia-Pacific markets that has carried over into the U.S. markets. Light volume on Wall Street amid a holiday-shortened session may have helped to exaggerate the extent of the downward move.
Peter Boockvar, equity strategist for Miller Tabak, said, "The Dubai request for a standstill agreement as a precursor for a hoped for debt restructuring is not a complete surprise considering the weekly newspaper articles on their $80b+ debt overhang."
"What is the surprise is the lack of any immediate support from Abu Dhabi (maybe not willing to support another bailout), the uncertainty of what exposure foreign banks have if any and where may other debt laden bodies lie, corporate and/or sovereign," he added.
Among individual stocks, financial services giant ING (ING) is under pressure in morning trading after the company priced its 7.5 billion euro rights issue at a nearly 40 percent discount. ING said it would issue 1.77 billion shares at 4.24 euros each.
The major averages have moved further off their lows for the session in recent trading, but they remain firmly in negative territory. The Dow is currently down 149.11 at 10,315.29, the Nasdaq is down 35.18 at 2,140.87 and the S&P 500 is down 18.35 at 1,092.28.
Sector News
With commodities prices under pressure amid concerns about the impact of the financial crisis in Dubai, resource stocks are turning in some of the market's worst performances.
Gold stocks are posting particularly steep losses as the price of the precious metal falls more than $17 an ounce. The NYSE Arca Gold Bugs Index is currently down 3.5 percent after ending the previous session at its best closing level in over a year.
Within the resource sector, steel and oil service stocks are also posting notable losses, dragging the NYSE Arca Steel Index and the Philadelphia Oil Service Index down 2.9 percent and 2.7 percent, respectively.
Significant weakness has also emerged in a variety of other sectors, reflecting broad based selling pressure. Housing, electronic storage, defense, defense and semiconductor stocks are posting substantial losses in mid-morning trading.
Stocks Driven By Analyst Comments
After seeing strength earlier in the week, shares of CGI Group (GIB) have come under pressure after Scotia Capital lowered its rating on the stock to Sector Perform from Sector Outperform. CGI Group is down 3.8 percent after ending Wednesday at a one-month closing high.
Shares of ABB Ltd. (ABB) are also showing notable weakness, with the power and automation technologies provider currently down 4 percent. The loss by ABB comes after HSBC Securities downgraded its rating on the company's stock to Neutral from Overweight.
On the other hand, shares of QLT Inc. (QLTI) are currently up 6.7 percent after RBC Capital upgraded its rating on the stock to Outperform from Sector Perform. RBC attributed the upgrade to QLT's settlement of its litigation with Massachusetts General Hospital.
Other Markets
In overseas trading, stocks markets across the Asia-Pacific region ended sharply lower on Friday on concerns about the financial crisis in Dubai. Japan's benchmark Nikkei 225 Index fell 3.2 percent, while Hong Kong's Hang Seng Index plunged 4.8 percent.
Meanwhile, the major European markets have shown a substantial turnaround over the course of the session after moving sharply lower at the open. The French CAC 40 Index is up 1.2 percent, while the U.K.'s FTSE 100 Index and the German DAX Index are both up 0.8 percent.
In the bond markets, treasuries are seeing considerable strength, as traders move their money into the safety of government-backed bonds. Subsequently, the yield on the ten-year note, which moves opposite of its price, is currently down 4.6 basis points at 3.233 percent.
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