Stock futures fall ahead of Bush automaker comment
New York (AP) — Wall Street headed for a lower open Friday as investors nervously awaited remarks from President Bush on the U.S. automaking industry - one of the nation's biggest employers.
The White House has been considering giving loans to Detroit's automakers to tide them over into the new year as their cash flows dwindle to a slow trickle. It said Bush will speak about the issue at 9 a.m. Eastern time.
Still, the potential for a bankruptcy remains. Treasury Secretary Henry Paulson said Thursday night that while bankruptcy for the automakers should be averted if possible, an "orderly" reorganization might be the best solution. Investors are not only worried about the embattled industry itself, but also about the job market ramifications of even an "orderly" bankruptcy of automakers like General Motors Corp. or Chrysler LLC.
The government lost more than half a million jobs in November, and the Labor Department said Thursday that new claims for unemployment remained well above 500,000 last week. When unemployment rises, spending declines and credit deteriorates.
And the industry that has already gotten billions in government funding - the financial industry - remains in sad shape. On Friday morning, Standard & Poor's downgraded its ratings on 12 major U.S. and European financial institutions, including Goldman Sachs Group Inc., JPMorgan Chase & Co., and Wells Fargo & Co.
Ahead of the market's open, Dow Jones industrial average futures fell 24, or 0.28 percent, to 8,654. Standard & Poor's 500 index futures fell 2.40, or 0.27 percent, to 890.10, while Nasdaq 100 index futures fell 5.75, or 0.47 percent, to 1,219.75.
The stock market tumbled Thursday, shaken by a negative ratings outlook for industrial conglomerate and Dow component General Electric Co. A drop in oil prices also weighed on stocks, pulling down the energy sector and revealing how downbeat investors are about consumer demand.
In electronic premarket trading Friday on the New York Mercantile Exchange, light, sweet crude fell $1.62 to $34.60 a barrel.
Yields on long-term Treasurys recovered from record lows early on Friday. The dollar was mostly higher against other major currencies, while gold prices fell.
Markets overseas were mostly lower. Japan's Nikkei stock average slipped 0.91 percent, while Hong Kong's Hang Seng index sank 2.39 percent. In midday trading, Britain's FTSE 100 was down 2.34 percent, Germany's DAX index fell 1.23 percent, and France's CAC-40 fell 1.17 percent.
In other corporate news Friday, Panasonic is acquiring rival Japanese electronics maker Sanyo for up to $9 billion through a public tender offer after top shareholders, including Goldman Sachs, agreed to the takeover.
Late Thursday, Oracle Corp. earnings weakened for the first time in years, but its shares rose nearly 3 percent in after-hours trading, with investors betting that the technology company will fare better than other companies as the economy struggles.
(Copyright 2008 by The Associated Press. All Rights Reserved.)