Wall Street headed toward a lower open Wednesday, as investors try
to assess how bad the global economic slump is and worry about the
trend in consumer spending.
The market, which fell for the second-straight session on Tuesday,
will get an update from Treasury Secretary Henry Paulson on the
government's financial rescue package at 10:30 a.m. EST. There are no
major economic reports due to be released during the session.
There was fresh evidence that the financial crisis is causing consumers to tighten their purse strings.
Department store operator Macy's Inc. reported a loss of $44 million
for the third quarter as results were weighed down by charges related
to a consolidation of several divisions. The consumer electronics chain
Best Buy Co. cut 2009 guidance on fears that consumer spending will
erode even further.
A big drop in consumer spending is a major concern since it drives
more than two-thirds of the U.S. economy. Investors are also awaiting
the government's retail sales figures on Friday and earnings from
Wal-Mart Stores Inc. on Thursday.
Battered shares of the top U.S. automakers might again come under
pressure. House Speaker Nancy Pelosi wants Congress to support a
financial bailout for the troubled U.S. auto industry, which is
suffering under the weight of poor sales, tight credit and a sputtering
economy.
President-elect Obama, when he met with President Bush at the White
House on Monday, urged Bush to support aid for struggling automakers,
and Democrats in Congress have begun drafting legislation that would
give General Motors, Ford and Chrysler access to $25 billion of the
rescue funds.
Dow futures shed 59, or 0.69 percent, to 8,578. Standard &
Poor's 500 futures dropped 4.60, or 0.52 percent, to 888.40. Nasdaq 100
index futures stumbled 10.20, or 0.84 percent, to 1,212.80.
On Tuesday, the Dow fell nearly 180 points as it became clearer to
investors that it's going to be hard to rely on the average consumer to
pull the economy out of its downturn. The market also closed lower amid
similar concerns on Monday.
Government bond prices, which did not trade Tuesday because of
Veterans Day, moved higher as investors looked for safer investments.
The three-month Treasury bill's yield fell to 0.21 percent from 0.22
percent late Monday, and the yield on the benchmark 10-year Treasury
note fell to 3.74 percent from 3.76 percent late Monday.
Lower yields indicate stronger demand.
Crude slipped below $59 a barrel Wednesday on the growing
realization that global economic growth next year will slow more than
originally feared, cutting demand for crude products such as gasoline.
Light, sweet crude was down 85 cents to $58.48 a barrel, after earlier
falling as low as $58.55, in electronic trading on the New York Mercantile Exchange.
In corporate news, American Express Co. is said to be seeking about
$3.5 billion from the U.S. government to help boost its balance sheet,
according to a report in The Wall Street Journal citing people familiar
with the situation. AmEx, the No. 4 U.S. credit card issuer, won
approval Monday from the Federal Reserve to become a bank holding company.
Prudential Financial Inc. said late Tuesday its 2008 annual dividend
will be roughly half of what it paid out to shareholders last year. The
insurer said it will pay a dividend of 58 cents per share on Dec. 19 to
shareholders of record at the close of business on Nov. 24. Last year,
the company paid a dividend of $1.15 per share.
After the closing bell, semiconductor equipment maker Applied Materials Corp. and Computer Sciences Corp., an information technology outsourcing firm, are also set to report.
Overseas, Japan's Nikkei closed down 1.29 percent and Hong Kong Hang
Seng fell 0.73 percent. In European trading, London's FTSE 100 was up
0.52 percent, Germany's DAX fell 0.22 percent, and France's CAC-40
added 0.11 percent.
