The Wall St. street sign is photographed in front of the American flag hanging on the New York Stock Exchange prior to a NYC Central Labor Council rally for worker protections, Thursday, Sept. 25, 2008 in New York. (AP Photo/Mary Altaffer)
NEW YORK – U.S. stocks looked to extend their losses at the open Thursday as investors found little relief from worries about the fate of Detroit's three automakers and broader fears about the struggling economy.
Stock futures contracts fell more than 1 percent following a late-day sell-off Wednesday that sent stocks to their lowest levels since 2003. The major indexes fell more than 5 percent, while the Dow Jones industrial average tumbled below 8,000, a psychological benchmark for the market.
Investors who have been groping for a bottom to the yearlong market rout are now worried that Washington's disagreement over whether to bail out the auto industry could lead to bankruptcy of major automakers like General Motors Corp. and could send ripple effects through the economy — including a further blow to consumer confidence.
Fears about the housing market, the overall economy and a stock market down 45 percent so far this year have led consumers to sharply curtail how much they take out of their wallets. That's a troubling prospect for Wall Street as consumer spending accounts for more than two-thirds of U.S. economic activity.
A weekly reading on unemployment claims Thursday could give investors further insights into the labor market, which the Federal Reserve projected Wednesday will weaken. Wall Street expects weekly claims for unemployment benefits to decline, though remain elevated.
The Labor Department's report on initial jobless benefit claims for the week ending Nov. 15 is expected to show a drop of 11,000 to a seasonally adjusted level of 505,000, according to a survey of Wall Street economists by Thomson Reuters. The report is due at 8:30 a.m. EST.
Worries about the prospect for employment helped drive Wall Street's decline Wednesday. The Fed projected that the nation's unemployment rate would rise to 6.3 percent to 6.5 percent this year and 7.1 percent to 7.6 percent next year. The level in October was 6.5 percent, and last year the rate averaged 4.6 percent.
Early Thursday, fears about the ability of the automakers to continue to stay afloat and jitters about employment continued to weigh on stocks early Thursday. Dow Jones industrials futures fell 111, or 1.38 percent, to 7,916 after the blue chips fell 428 points, or 5.1 percent, on Wednesday.
Standard & Poor's 500 index futures fell 15.20, or 1.87 percent, to 797.30. Nasdaq 100 index futures fell 17.00, or 1.56 percent, to 1,075.50.
Bond prices rose as investors sought the safety of government debt. The yield on the benchmark 10-year Treasury note fell to 3.27 percent from 3.32 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices fell.
The three-month Treasury bill, considered one of the safest assets around, rose to 0.08 percent from 0.06 percent late Wednesday.
Light, sweet crude fell $1.41 to $52.21 in premarket electronic trading on the New York Mercantile Exchange.
Overseas, markets followed Wall Street's moves lower. Japan's Nikkei stock average fell 6.9 percent, while Hong Kong's Hang Seng Index slid 4.04 percent. In afternoon trading, Britain's FTSE 100 fell 2.19 percent, Germany's DAX index fell 2.63 percent, and France's CAC-40 fell 3.13 percent.
The plan to give U.S. automakers billions of dollars in government-backed loans remains troubled. Senate Majority Leader Harry Reid, D-Nev., canceled a planned vote Wednesday on a bill that would divert $25 billion for the auto industry from the $700 billion Wall Street financial rescue package. The Bush administration and congressional Republicans have rejected Democrats' plan to tap into that money.