Pat Dollard | Young Americans

S&P 500, Dow, Nasdaq Futures Reach `Limit Down’ Level

By Sarah Jones and Alexis Xydias - (Bloomberg)

Trading in futures on the Standard & Poor’s 500 Index, the Dow Jones Industrial Average and the Nasdaq 100 Index was limited until U.S. markets open to stop the contracts from extending losses of more than 6 percent today.

The S&P 500 futures will not trade below 855.20, the so- called limit down level this quarter, until U.S. regular trading begins at 9:30 a.m. New York time, said Jeremy Hughes, a London- based spokesman for the Chicago Mercantile Exchange.

Dow Average futures won’t trade below the 8,224 level, he said, while the Nasdaq 100 futures won’t fall below 1,168.50. The “limit down” suspension allows the contracts to trade above those levels, he said.

Stocks tumbled around the world today and U.S. index futures sank on deepening concern the global economic slump will crimp corporate earnings. The S&P 500 futures slid 6.6 percent while contracts on the Dow average slipped 6.3 percent.

“When the selling becomes so heavy there are very few places to hide,” said Richard Robinson, who helps oversee $1.8 billion at Jersey-based Ashburton Ltd. “It is an extremely risk-averse market.”

The “limit down” restriction thresholds are calculated on a quarterly basis. The New York Stock Exchange plans to open for U.S. trading today, NYSE’s New York-based spokesman Richard Adamonis said.

OPEC agrees sharp output cut, oil slide goes on

By Michael Georgy and Peg Mackey

By Peg Mackey and Michael Georgy

VIENNA (Reuters) - An emergency OPEC meeting on Friday reached swift agreement to chop production by 1.5 million barrels per day (bpd) as a first step toward halting a deep oil price slide.

International benchmark U.S. crude has slumped by well over 50 percent from a record high of $147.27 hit in July. On Friday, it fell again to just over $63 a barrel.

“The decision was straightforward,” Saudi Oil Minister Ali al-Naimi said after the meeting.

“OPEC will do whatever is necessary to balance oil markets.”

Before the roughly two hours of talks, which ended just before noon, ministers had been in broad agreement about the need to reduce production, but had disagreed over the extent of any cut.

They said they had to balance their own needs with those of a flailing world economy.

“Any cut should not affect the global (financial) market,” said Kuwaiti Oil Minister Mohammed al-Olaim, adding the reduction would be “a wise cut.”

Kuwait and other core Gulf producers, which have relatively low price requirements and are nervous about further destruction of demand in consumer countries, had favored a relatively modest output reduction of around a million bpd, delegates said.

Venezuela, Iran and Libya, which are more dependent on higher oil revenues, were among those who had pushed for a deeper cut, with some asking for around 2 million bpd.

The two sides met in the middle. They also said they could take further action if necessary before the next scheduled meeting of the Organization of the Petroleum Exporting Countries in December in Oran, Algeria.

“If a further decision has to be made, it will be made and we will not necessarily wait for the Oran meeting,” said OPEC President Chakib Khelil who will host the Algeria meeting.

SAUDI SETS THE PACE

Top exporter Saudi Arabia is the only exporter to be pumping significantly above its agreed target and it would be expected to lead the reduction in supplies.

But it has repeatedly said other countries must play their part.

Of the 1.5 million bpd being removed from the September output target of 28.8 million bpd, Saudi Arabia would pump 466,000 bpd less and Iran 199,000 bpd, OPEC said in a communique.

When prices were racing toward their July record, Saudi Arabia unilaterally increased its production to try to calm a rally, which was then perceived as out of control.

It has already reduced supplies slightly as global economic recession has destroyed demand and the oil price has plummeted, reviving bad memories for OPEC of the 1998 price crash when the market fell below $10.

Venezuelan Minister of Energy and Petroleum Rafael Ramirez said there was a risk oil could fall back to that level.

“We have to handle the situation in a very, very responsible manner as OPEC…. that way we can avoid a price collapse like 1998,” he said.

In the near term, analysts have said whatever the group does it could struggle to influence the price.

“One and a half million barrels per day may not have too much of an effect,” said a London-based analyst who asked not to be named.

“Two million would maybe have a more psychological impact, but I still don’t know if it would help the price to increase.”