Stock Futures Point to Weak Wall Street Open

Updated from 7:00 a.m. EDT

Premarket futures were forecasting a lower open for stocks on Wall Street Friday, as the credit crisis wore on and financial stocks, hammered all week, looked ready to take another drubbing.

Futures for the S&P 500 were down 20 points at 893 and were 21 points shy of fair value. Nasdaq futures were down 16 points at 1257 and were 29 points below fair value.

After a day of whipsaw trading, stocks sold off hard into the close Thursday. Skepticism about government intervention in the financial markets and heavy selling of financial and insurance stocks contributed to declines in the major indices. The Dow Jones Industrial Average dropped 7.3%, the S&P 500 gave back 7.6%, and the Nasdaq tumbled 5.5%.

Battered financial firms Morgan Stanley (MS Quote) and Goldman Sachs (GS Quote) look to again be in focus ahead of the new day's trading. Ratings agency Moody's said it may cut Morgan Stanley's credit rating, and lowered its credit outlook for Goldman to negative.

Amid the increasing concern about banks, the U.S. government was considering guaranteeing bank debt and insuring all domestic bank deposits, according to a report in The Wall Street Journal.

The report precedes a meeting of the Group of Seven industrial nations Friday. The economic powers plan to discuss a coordinated response to the global credit crisis.

Following a heated battle with Citigroup (C Quote), Wells Fargo (WFC Quote) appeared set to buy Wachovia (WB Quote) unencumbered.

Citigroup said it will continue to pursue $60 billion in damages for breach of contract but would not try to overturn a merger between Wells Fargo and Wachovia. Citi had announced a Wachovia acquisition on Sept. 29, only to trumped days later by a new bid from Wells.

The Journal also reported that insurance firm AIG (AIG Quote) took out an additional $9 billion in government loans, bringing its total borrowing from the U.S. in the past three weeks to $70.3 billion. The company continues to attempt to sell its assets in a struggle to stay afloat.