Food prices rose 0.3 percent following a 0.5 percent increase in June. The report also showed that the core consumer price index, which excludes food and energy prices, rose 0.2 percent in July, matching the increase that was seen in the previous month and economist estimates. The year-over-year increase in core prices remained at 2.2 percent for the third straight month, lingering at the lowest level in over a year.


09:45AM Wall Street opened steeply lower amid fears about global credit crunch.

Wall Street plunged at opening Wednesday, with continuous fears about a global credit crunch stifling positive sentiment, generated by data which showed the slowest consumer price inflation growth in eight months. An announcement from the Fed Reserve that it is ready to inject more cash to the banking system if needed, failed to bring relief. The Dow Jones fell below 13,000.

Shares of Countrywide Financial Corp. (CFC: chart), the biggest U.S. mortgage lender, fell 2% after Merrill Lynch downgraded the stock. Among other stocks driven by analyst comments, drinks and snacks giant PepsiCo (PEP: chart) was downgraded to neutral from buy at Goldman Sachs, with the broker citing valuation. The stock added 1%. At the same time, the broker upgraded Molson Coors Brewing (TAP: chart) to buy, sending its stock up 1.3%.

Agricultural equipment maker Deer & Co.'s (DE: chart) said its Q3 earnings rose 23% o $537.2 million, or $2.37 a share, compared with $436 million, or $1.85 a share a year earlier. H.J. Heinz Co. (HNZ: chart) projected Q1 sales growth of about 9% and earnings per share of 62 cents to 63 cents, above analyst expectations. The stock rose 3.5%.

In early trading, the Dow Jones industrial average fell 49.91, or 0.38%, to 12,979.01, trading below 13,000 for the first time since April 25. The Standard & Poor's 500 index was down 2.98, or 0.21%, at 1,423.56, and the Nasdaq composite index was down 4.43, or 0.18%, at 2,494.69. Bonds rose, with the yield on the benchmark 10-year Treasury note at 4.70% from 4.73% late Tuesday.


09:00AM U.S. stock futures indicated a lower opening, despite benign inflation data.

U.S. stock futures were indicating steeply lower opening on Wednesday, as growing concerns about the strength of the credit market offset upbeat economic data. The Commerce Department said that U.S. consumer prices rose only 0.1% in July on falling gasoline prices, marking the slowest inflation rate in eight month. The core consumer price index increased 0.2% for the second straight month.

In corporate news, Bank of America (BAC: chart) and Countrywide Financial (CFC: chart) refused to lend money when hedge funds use mortgages, collateralized debt obligations and subprime securities as collateral. Countrywide Financial slipped 7% in the pre-open after it was downgraded to sell from buy at Merrill Lynch. The broker cited concerns about liquidity in the mortgage sector.

On the earnings news front, Applied Materials (AMAT: chart) dropped 4% in pre-open trade after the low end of the chip equipment maker's quarterly earning missed estimates. European food makers advanced after Nestle (NSRGY: chart) posted an 18% profit rise, raised its earnings forecast and announced a $21 billion stock buyback.

S&P 500 futures fell 8.5 points at 1,425.80 and Nasdaq 100 futures dropped 13.75 points at 1,901.00. Futures on the Dow Jones Industrial Average dropped 74 points.


8:30AM New York, 8:30PM Hong Kong – Asian markets plunge on weakness in U.S. trading.

Asian markets fell precipitously as fears emanating from U.S. mortgage markets spread in the region. In the overnight trading broader averages fell nearly 2%, dragging the regional markets lower. Indonesia led the region with a loss of 6.44% after dropping 2% in the previous session, followed by losses of 4.1% in Philippines, 3.6% in Taiwan, and 3.3% in Australia. Hong Kong fell 2.8% and Japan dropped 2.2%.

In Sydney trading ASX 200 fell 176.80 points or 2.96% to close at 5,788.00. Of the 201 stocks in the index 188 declined, 8 gained and 8 stocks were unchanged. Outlook for the rest of week remains week as traders expects unwinding of the leveraged trading at the end of this week. Basis Capital reported that fund investors may lose 80% on the subprime securities meltdown in the U.S.

Arrow Energy led the stocks in the index with a plunge of 13% followed by 10% losses in Alco finance, Mount Gibson, Zinifex, Babcock & Brown, Murchison Metals, Oxiana Resources, and Compass Resources.

Resources and financial stocks led the decline in the broader market. BHP Billiton, Goodman Group, Oil Search, Macquarie Bank, Harvey Norman, Lihir Gold, Axa Asia Pacific fell more than 4%. AMP Limited, St George Bank, Westpac Banking, and QBE Insurance, and Tishman Speyer dropped more than 2%.

Of the eight stocks that managed to climb higher, James Hardie led the pack with a gain of 2.27 on 10.7 million share volume, followed by 1% rise in Duet Group, and fractional increases in Downer, Ivesta Property, Southern Cross Broadcasting, Metcash, and Lion Nathan.