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Stocks on Wall Street Appear Headed for Early Decline

Mike Taylor

Premarket futures were hinting at a sour open for Wall Street Thursday, as the automakers continued to search for ways to placate Congress, a slew of big-name companies announced layoffs and European central banks cut interest rates as recession set in abroad.

Futures for the S&P 500 were down 16 points at 852 and were 18 points below fair value. Nasdaq futures were lower by 20 points at 1136 and were 30 points short of fair value.

On Wednesday, stocks fluctuated before ending higher as Ford (F Quote), General Motors (GM Quote) and Chrysler petitioned Congress for a bailout. Investors also processed a series of economic data releases.

Ahead of the new session Thursday, the automakers are again in focus. Bloomberg reported that management at GM and Chrysler were contemplating a prearranged bankruptcy as a means to get government funds.

Layoffs and salary reductions were dominating the day's early headlines. Executives at Citigroup (C Quote), along with director and senior adviser Robert Rubin, were willing to go without bonuses this year, according to a report by the Financial Times.

Swiss bank Credit Suisse (CS Quote) announced plans to cut 5,300 jobs and said it expects to report a $2.5 billion fourth-quarter loss.

In other financial-sector news, The Wall Street Journal reported that credit card company Capital One (COF Quote) intends to buy Chevy Chase Bank for $520 million in a cash-and-stock deal.

The bout of layoffs and tempered guidance was not confined to the financial sector. Telecom company AT&T (T Quote) announced workforce reductions of 12,000, or about 4% of its employees, while DuPont (DD Quote) set plans to cut 2,500 workers.

Software firm Adobe Systems (ADBE Quote) reported preliminary fourth-quarter results that were ahead of expectations, but also announced plans for an 8% reduction in headcount.

In the pharmaceutical space, Merck (MRK Quote) reaffirmed its 2008 earnings projections but projected 2009 results would fall short of analysts' current estimates.

Homebuilder Toll Brothers (TOL Quote) said its fourth-quarter loss narrowed year over year and said its revenue in the coming year would fall substantially from current levels.

In one bright spot, retail giant Wal-Mart (WMT Quote) announced its same-store sales rose 3.4% in November.

Turning to economic data, the Labor Department said jobless claims for the week ended Nov. 29 fell 21,000 509,000. The result was better than economists' forecast of 540,000 claims for the week. Separately, the Census Bureau's October read on factory orders also is on the schedule.

As the financial crisis was felt overseas, the Bank of England cut its key interest rate by one percentage point to 2%, and the European Central Bank reduced its rate to 2.5% from 3.25%.

Looking at commodities, crude oil was down $1.09 to $46.65 a barrel. Gold was falling $5.40 to $765.10 an ounce.

Longer-dated U.S. Treasury securities were rising in price. The 10-year note was up 4/32, yielding 2.64%. The 30-year was adding 18/32 to yield 3.14%. The dollar was climbing vs. the euro and pound but softening against the yen.

Abroad, European exchanges, including the FTSE in London and the DAX in Frankfurt, were trading lower. In Asia, Japan's Nikkei and Hong Kong's Hang Seng finished on the downside.