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Stock Futures Signal Weak Start

Mike Taylor

Premarket futures were forecasting a lower open for stocks on Wall Streeet Wednesday, a day after the market saw an early rally completely erased by a loss of momentum in the afternoon.

Futures for the S&P 500 were down 2.5 points at 1274 and were 3.7 points below fair value. Nasdaq futures were lower by 5 points at 1847 and were 5.2 points under fair value.

On Tuesday, the major indices rose early on a sharp decline in crude oil prices, only to give back those gains and finish in negative territory. Poor performances by energy, mining and technology stocks contributed to the reversal.

Several financial-services names were in the spotlight ahead of the new trading day. Continuing to stoke speculation on a potential deal to help struggling brokerage Lehman Brothers (LEH Quote), the Associated Press said that Korea Development Bank has inked a proposal to buy a 25% stake in Lehman. The news agency cited a report in a widely circulated South Korean Newspaper.

Meanwhile, Ospraie Fund, a commodities investment fund that is 20%-owned by Lehman, announced that it will be shutting down because of bad bets on copper and natural gas.

Elsewhere in the financial sector, The Wall Street Journal reported that large Chinese banks are reducing their investments in mortgage debt issued by Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote).

Back in merger news, beverage maker Coca-Cola (KO Quote) offered to buy China Huijan Jice for about $2.5 billion.

Machinery manufacturer Joy Global (JOYG Quote) and office-supplies retailer Staples (SPLS Quote) are slated to report earnings ahead of the open.

In the realm of commodities, crude oil was declining $1.52 to $108.19. Gold was down $10.10 at $800.40.

Shifting to economic data, auto manufacturers will be revealing their August sales figures. The Census Bureau will also release data on factory orders for July. The Federal Reserve's so-called beige book, which contains anecdotal data on the state of the economy, will come out in the afternoon.

Longer-dated U.S. Treasury securities were down slightly. The 10-year was off 2/32 to yield 3.74%, and the 30-year was down 3/32, yielding 4.36%. The dollar was gathering strength against the euro and pound but was slightly lower against the yen.