Stocks Set for Decline
Stock index futures were pointing to a lower start for Wall Street Tuesday as traders dealt with disappointing results from
Fannie Mae
(FNM)
and another record day for oil prices.
S&P 500
futures were sinking 5 points at 1403 and were more than 4 points below fair value. Futures on the Nasdaq 100 were losing 6.5 points to 1974 and were nearly 7 points under fair value.
Fannie Mae tumbled 10.7% in early trading after the mortgage buyer said it lost $2.51 billion, or $2.57 a share, in the latest quarter, after payment of preferred dividends. The government-sponsored firm also said it will cut its dividend and raise $6 billion through share offerings.
Freddie Mac
(FRE)
was off 7%.
Merrill Lynch
(MER)
was another drag, slipping 0.7% on word that the government has asked for information about auction-rate securities and the failure of some recent auctions.
Elsewhere among financials,
UBS
(UBS) - Get Report
said it took a loss of $10.97 billion in its most recent quarter after a $19 billion writedown. UBS also said it would shrink its workforce by 5,500 workers by the middle of next year, including cutting up to 2,600 employees in the investment banking division, and sell $15 billion in troubled mortgage assets to
BlackRock
(BLK) - Get Report
. Shares were off 2.5% in the premarket.
Last time out, equity measures saw pressure from crude oil, which got past the $120 mark for the first time ever, as well as the evident disintegration of a proposed merger between
Microsoft
(MSFT) - Get Report
and
Yahoo!
(YHOO)
.
At the end of the day, the
Dow Jones Industrial Average
lost 87 points to 12,970, and the S&P 500 surrendered 6 points to 1407. The
Nasdaq Composite
sank 13 points to 2464.
As the new day began, oil touched yet another all-time high, $120.93, before backing off to an 11-cent loss at $119.86. Gold futures, meanwhile, added $2.60 to $876.70. The U.S. dollar weakened 0.1% against both the euro and the yen.
Dow component
Merck
(MRK) - Get Report
announced plans to lay off 1,200 workers, a decision that comes a few days after the Food and Drug Administration rejected the company's new cholesterol drug.
Treasury prices were rising. The 10-year note was up 7/32 in price to yield 3.84%, and the 30-year bond added 11/32 in price, yielding 4.58%.
Overseas markets were mixed. Hong Kong's Hang Seng ticked up 0.3%. In Europe, London's FTSE 100, Germany's Xetra Dax, and the Paris Cac were all losing 0.6% or more.