NEW YORK - U.S. stock futures came off their highs and pointed to a mixed open Wednesday after Lehman Brothers Holdings Inc.'s plans to shore up its balance sheet failed to calm Wall Street's worries about the well-being of the company.
Unease about the No. 4 U.S. securities firm touched off heavy selling Tuesday as investors worried that it has few options to raise capital. The already beaten down stock lost nearly half its value Tuesday as investors grew fearful that the company would succumb to soured mortgage debt and other financial difficulties.
Lehman's implicit indication Wednesday that it would consider putting itself on the block and its announcement that it would sell a majority stake in its asset-management arm appeared to offer investors little reassurance because those options had already been widely discussed on Wall Street. In addition, the company reported a preliminary fiscal third-quarter loss of $3.9 billion and slashed its annual dividend to 5 cents from 68 cents.
Investors' nervousness about the company grew Tuesday following reports that Lehman's talks with state-run Korea Development Bank about a possible investment had broken down. KDB confirmed the development Wednesday.
Lehman shares fell 7 percent in premarket electronic trading, reversing gains seen ahead of the announcement.
Wall Street has had intractable worries about the financial sector since the near-collapse and subsequent sale of Bear Stearns Cos. in March. Banks such as Lehman have struggled in the past year with unwieldy amounts of mortgage-backed securities and other risky investments on their books.
Many Wall Street observers say the stock market will not be able to carve out a sustained recovery until investors can determine the scale of losses in the financial sector. Already global banks have written off more than $300 billion in bad investments.
Dow Jones industrial average futures, which had been up more than 100 just ahead of the Lehman announcement, fell 42, or 0.37 percent, to 11,205. Standard & Poor's 500 index futures fell 4.20, or 0.34 percent, to 1,222.30, while Nasdaq 100 index futures rose 6.50, or 0.38 percent, to 1,735.25 but were off their highs.
The Dow fell 2.4 percent Tuesday, essentially erasing big gains logged Monday, while the S&P 500 tumbled 3.4 percent and the Nasdaq composite index fell 2.6 percent.
Bond prices slipped Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.60 percent from 3.59 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude fell 26 cents to $103 a barrel in electronic trading on the New York Mercantile Exchange after OPEC indicated it could cut more than 500,000 barrels a day of production. On Tuesday, oil settled at the lowest level since April 1.
Overseas, Japan's Nikkei stock average fell 0.44 percent. In morning trading, Britain's FTSE 100 fell 0.12 percent, Germany's DAX index declined 0.57 percent, and France's CAC-40 fell 0.88 percent.
Designed by Gray Digital Media