Wall Street Heads for Lower Open

By: AP
By: AP
Wall Street appeared headed for a lower open Wednesday as investors awaited more readings expected to show a still-weakening economy.

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 – Wall Street appeared headed for a lower open Wednesday as investors awaited more readings expected to show a still-weakening economy. News that BlackBerry maker Research In Motion was lowering its third-quarter guidance added to the anxiety on the Street.

RIM said it has added fewer new subscribers than expected as the economy slowed. The news, which came amid predictions that retail sales fell in November, had investors worrying again about the impact of the recession on consumer spending — spending that is crucial for the economy to recover.

The stock market rebounded Tuesday from the previous day's sharp decline, as investors found solace in news from Ford Motor Co. and General Electric Co. Ford Chief Executive Alan Mulally said the automaker has enough cash to make it through 2009 and might not need government help, while General Electric encouraged investors by maintaining its dividend.

But the market cannot hold on to any upbeat news for long, and more volatility is expected for the forseeable future as data keep pointing to weakness.

The Labor Department will release revised productivity figures for the third quarter at 8:30 a.m. EST, while the Institute for Supply Management will release its non-manufacturing index at 10 a.m.

Wall Street expects productivity growth to have slowed sharply in the July to September quarter, reflecting the fact that the overall economy was declining during that period.

Meanwhile, the Institute for Supply Management's monthly measure of the U.S. services sector is expected to fall, following a report earlier this week that its manufacturing index fell to the lowest level in 26 years. Wall Street economists surveyed by Thomson Reuters predict the trade group will report that its services index fell to 42 in November from 44.4 in October.

Also due later Wednesday is the Federal Reserve's beige book, an assessment of business conditions in different regions of the country.

While analysts largely believe that much bad news is already priced into the market, investors are worried about a severe and prolonged recession, so any discouraging data could still send the market downward. With retailers reporting their November sales figures on Thursday and the government's employment report due Friday, the market could see some particularly rocky trading in the next few days.

The fate of the beleaguered auto industry is also likely to continue to weigh on investors, as Congressional leaders review three separate survival plans from Ford, Chrysler LLC and General Motors Corp. In the plans delivered to Capitol Hill on Tuesday, Chrysler and GM said they needed an immediate infusion of cash to last until New Year's, while Ford requested a $9 billion "standby line of credit." Following the review of the plans, lawmakers could be called back to Washington next week for a special session to vote on a bailout.

Dow Jones industrial average futures fell 88, or 1.04 percent, to 8,344. Standard & Poor's 500 index futures dipped 10.00, or 1.18 percent, to 838.70, while Nasdaq 100 index futures fell 17.50, or 1.54 percent, to 1,115.50.

After fluctuating sharply on Tuesday, the Dow rose 270 points — erasing more than a third of the previous session's nearly 680-point drop — and all the major indexes rose more than 3 percent. But analysts were quick to point out that the advance might not be lasting, noting that these kind of market movements are typical of periods marked by low economic growth.

Financial stocks will likely remain in focus Wednesday. Shares of major banks rallied Tuesday, boosted by the Fed's move to extend the life of key programs aimed at loosening the credit markets.

Goldman Sachs Group Inc. was the one exception; the stock fell as an increasing number of analysts forecast a big loss at the firm in the fourth quarter — which would be its first since going public in 1999.

Bond prices fell early Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.74 percent from 2.70 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.06 percent from 0.05 percent late Tuesday as demand eased very slightly.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude oil rose 36 cents to $47.32 a barrel in electronic premarket trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average rose 1.79 percent. In afternoon trading, Britain's FTSE 100 was up 1.41 percent, Germany's DAX index was down 1.79 percent, and France's CAC-40 was down 1.52 percent.


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