US Stocks Headed For Sharply Lower Open As Economic Gloom Drives Trading

U.S. stocks were headed for a sharply lower open Thursday after steep losses in global markets following the Federal Reserve's downbeat assessment of the U.S. economy.

About an hour before the start of trading, Dow Jones Industrial Average futures slid 245 points, or 2.2%, to 10762. The Dow dropped 284 points on Wednesday as investors focused more on the Federal Reserve's acknowledgement of "significant" downside risks to the economy than its efforts to stimulate spending and investment by increasing the share of longer-term Treasurys it holds.

Standard & Poor's 500 stock index futures shed 28 points, or 2.5%, to 1128 and Nasdaq 100 futures slumped 49 points, or 2.2%, to 2197. Changes in stock futures do not always accurately predict stock moves after the opening bell.

The first improvement in U.S. jobless claims data in three weeks did little to change the negative tone of premarket trading. New unemployment benefit claims last week dropped by 9,000 to a seasonally adjusted 423,000 for the weekend ended Sept. 17, according to the U.S. Labor Department. The level remains too high to suggest much improvement in the stubbornly weak U.S. jobs market. In addition, the previous week's figure was revised to reflect more jobless claims.

In overseas markets, Europe was broadly lower, with the Stoxx Europe 600 shedding 4% and hitting the lowest level in more than two years in intraday trading. Asian bourses also dropped sharply, with China's Shanghai Composite losing 2.8%, after a reading on manufacturing activity in China contracted in September.

Still ahead, a reading on home prices in July and the Conference Board's index of leading economic indicators for August is due out at 10 a.m. ET.

Gold futures dropped sharply to below $1739 an ounce. Crude oil futures slid below $82 a barrel. Gold and crude were pressured by a sharp rise in the U.S. dollar, which gained 1% against the euro.

In corporate news, shares of Goodrich gained 10% premarket after aircraft-components maker agreed to be acquired by blue chip conglomerate United Technologies for $16.4 billion in cash. United Technologies fell 3.8%.

FedEx slipped 1% after the package delivery service reported fiscal first-quarter results that topped expectations, but said it slightly reduced its earnings outlook as it looked to adjust its cost structure to match lower demand levels.

Red Hat rallied 5.7% on the software company reported better-than-expected fiscal second-quarter results.

-By Brendan Conway, Dow Jones Newswires; 212-416-2670; brendan.conway@dowjones.com

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