Wall Street Heads for Mixed Open

By: AP
By: AP

NEW YORK – Still reeling from the previous day's big losses, Wall Street was hesitant to make any major moves Wednesday. Stock futures were narrowly mixed as investors remained skeptical of the government's ability to pull the economy out of recession.

Some bounce back is possible after the major stock indexes fell more than 4 percent on Tuesday, including the Dow Jones industrial average, which tumbled 382 points. But with few economic and corporate earnings reports scheduled for Wednesday, it is likely that investors will continue to flounder, searching for any news or hope to grab onto.

Tuesday's sharp drop was triggered by disappointment in the government's plans to overhaul the $700 billion financial rescue package passed by Congress last fall.

Investors were discouraged by a lack of details from Treasury Secretary Timothy Geithner on how the government plans to direct more than $1 trillion in public and private aid to support the ailing financial system.

The plan is meant to expand the government's efforts to unfreeze the credit markets and encourage more normal lending by banks to consumers and businesses. The latest version also calls for a government-private sector partnership to help remove banks' bad assets from their balance sheets.

Investors are also awaiting a resolution on a more than $800 billion economic stimulus package that passed in the Senate on Tuesday. Republican and Democratic leaders are still at odds over how much money should be directed to certain programs. The final version of the bill is expected to reach President Barack Obama's desk within days.

Ahead of the market's open, Dow Jones industrial average futures rose 11, or 0.14 percent, to 7,889. But Standard & Poor's 500 index futures slipped 2.70, or 0.33 percent, to 824.20, while Nasdaq 100 index futures fell 6.25, or 0.51 percent, to 1,226.25.

There was some downbeat corporate news Wednesday to keep investors on edge.

Swiss bank Credit Suisse Group reported a fourth-quarter net loss of $5.61 billion, much worse than analysts expected, as its asset management and investment banking units lost money amid the financial crisis.

Luxury homebuilder Toll Brothers Inc. said its first-quarter home building revenue fell 51 percent as the downturn in the housing market continued to weigh on results.

The reports underscored just how disappointing the most recent earnings season was, with many companies forecasting for poor business conditions through the end of the year.

Meanwhile, the Commerce Department will release international trade data for December at 8:30 a.m. Eastern time.

Also Wednesday, the chief executives of the nation's top banks will appear before a Senate committee to answer questions about how they have put to use more than $160 billion in taxpayer money. They will also likely be probed on their own compensation. Several top executives at banks have declined bonuses for 2008 amid the market turmoil, and President Obama recently instigated new, strict measures to control executive compensation at companies receiving additional bailout funds.

In a letter to U.S. House Financial Services Chairman Barney Frank on Wednesday, New York Attorney General Andrew Cuomo acused Merrill Lynch & Co. executives of corporate irresponsibility by secretly and prematurely awarding $3.6 billion in bonuses as taxpayers were bailing out the industry.

Cuomo said that Bank of America, which acquired Merrill last fall, was apparently complicit in the move to award bonuses before Merrill's dismal fourth quarter earnings were announced.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.80 percent from 2.82 percent late Tuesday. The yield on the three-month T-bill, considered one of the safest investments, was unchanged from late Tuesday at 0.30 percent.

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

Light, sweet crude rose 26 cents to $37.81 in electronic premarket trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 0.29 percent. In late morning trading, Britain's FTSE 100 was down 0.59 percent, Germany's DAX index was down 0.45 percent, and France's CAC-40 was down 0.95 percent.


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