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Stocks on Wall Street Head for Decline

Mike Taylor

Premarket futures were pointing toward a lower open for U.S. stocks Thursday as a set of reduced analyst estimates for the financials and an uptick in crude oil prices sent investors scurrying for cover.

Futures for the S&P 500 were down 8 points at 1266 and were 8.5 points below fair value. Nasdaq futures were down 11 points at 1905 and were 11 short of fair value.

On Wednesday, the major indices fluctuated between gains and losses before ending the day in positive territory. Concern about the financial sector -- particularly mortgage companies Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote) and investment bank Lehman Brothers (LEH Quote) -- left traders without much conviction as they closely eyed the price of oil.

With the new day came renewed worry over the fate of the battered financials. Following Goldman Sachs' slashed earnings forecast for five major financial firms just a day ago, Citigroup on Thursday lowered estimates on Goldman Sachs (GS Quote), Lehman and Morgan Stanley (MS Quote). Citi predicted further writedowns for the big Wall Street firms as they continue to navigate the credit crisis.

As to corporate earnings, investors are in for a batch of new reports before the session begins. Among those due to report are bookseller Barnes & Noble (BKS Quote), fast-food restaurant Burger King (BKC Quote) and video-games retailer GameStop (GME Quote).

Away from earnings, The Wall Street Journal reported that Kohl's (KSS Quote) CEO Larry Montgomery will hand over head-management duties to President Kevin Mansell. Montgomery will stay on as chairman of the company, the report said.

The Journal also said that the Federal Reserve contacted Credit Suisse (CS Quote) last month to discuss rumors that it was planning to cut off credit from Lehman Brothers. Credit Suisse said that the rumor was untrue, the report said. Lehman shares have lately been hammered over uncertainties about its liquidity levels.

As for economic data, the Labor Department's initial jobless claims for the week ended Aug. 16 are due at 8:30 a.m. EDT. Investors will also hear the Conference Board's leading indicators report. The Philadelphia Federal Reserve will later release its regional manufacturing index.

In the realm of commodities, oil prices were up $1.03 at $116.59 a barrel. Gold was gaining $8.20 at $824.50.

Treasury prices were unchanged. The 10-year and 30-year note were each flat in price, yielding 3.80% and 4.44%, respectively. The dollar was falling vs. the euro, yen and pound.

Overseas exchanges, including the FTSE in London, the Dax in Frankfurt, the Nikkei in Japan and the Hang Seng in Hong Kong, were mostly trading lower.