US stocks head for sharply lower open

NEW YORK (AP) -- U.S. stocks headed for a sharply lower open Monday as Wall Street and other global markets reeled from JPMorgan Chase & Co.'s government-backed buyout of faltering investment bank Bear Stearns Cos.

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.

Dow Jones industrial average futures fell 238, or 1.99 percent, to 11,746. Standard & Poor's 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.

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.

(Agencies)