U.S. Futures Reverse, Suggest Down Open - TheStreet

Updated from 6:55 a.m. EDT

Premarket futures were suggesting another down open for stocks in New York Tuesday following a slew of credit-ratings downgrades for trod-upon investment firm

AIG

(AIG) - Get Report

.

Futures for the

S&P 500

were down 10.7 points at 1185.4, which is about 8 points below fair value.

Nasdaq

futures down 8.3 points at 1713, which is 1.3 points below fair value.

During trading on Monday, bad news from

Lehman Brothers

(LEH)

,

Merrill Lynch

(MER)

and

AIG

(AIG) - Get Report

sent the market plunging. The three major indices each lost at least 3%, and the

Dow Jones Industrial Average

staged its worst one-day drop in seven years.

On Monday, Lehman filed for bankruptcy protection after failing to find a partner willing to take on its subprime exposure. Lehman's bankruptcy is the largest in U.S. history in terms of assets held before the filing. Also struggling with bad assets and fears that it may go the way of Lehman, Merrill agreed to be bought by

Bank of America

(BAC) - Get Report

for $50 billion.

Meanwhile, AIG, whose balance sheet is crippled by its sale of insurance on subprime-related securities. The company's credit ratings were lowered late Monday by S&P, Moodys and Fitch.

Ahead of the new day's trading, investment bank Goldman Sachs reported a 71% drop in third-quarter profit but it still beat Wall Street earnings estimates. Goldman has seemed exceptionally sturdy compared with its peers in the deeply troubled sector.

Best Buy

(BBY) - Get Report

, however, fell short of Wall Street's expectations as its fiscal second-quarter profit declined 19% from a year ago.

In the realm of economic data, the Federal Reserve is expected to decide whether it will cut its target interest rate. In the wake of recent turmoil, economists and investors have increased their expectations for a rate reduction.

The Bureau of Labor Statistics is also set to release its August consumer price index.

Shifting to commodities, crude oil was losing $3.10 to $92.61 a barrel. Gold was falling $6.10 to $780.90 an ounce.

Longer-dated U.S. Treasury securities were falling in price. The 10-year note was down 5/32 to yield 3.4%, and the 30-year was down 18/32, yielding 4.05%. The dollar was losing ground vs. the yen, euro and pound.

Abroad, markets such as the FTSE in London and the Dax in Frankfurt were trading lower. The Nikkei in Japan and the Hang Seng in Hong Kong closed with losses.