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Updated from 7:21 a.m. EDT

Premarket futures were forecasting a lower open for U.S. stocks Wednesday, after the

Federal Reserve

agreed to back and take over insurance giant




Futures for the

S&P 500

were down 21.9 points at 1194.3 and were 20.5 points below fair value.


futures were lower by 24 points at 1709 and were 24.7 points short of fair value.

On Tuesday, the major indices ended a volatile day with strong gains. A reported decision by the Federal Reserve to provide a loan package to AIG accompanied stocks' late move to the upside. During earlier trading that day, government officials had said they wouldn't provide a bailout package for the company.

After trading closed Tuesday, the


reversed its earlier decision and agreed to offer AIG an $85 billion bridge loan to bail out the company. In exchange, the government will essentially get a 79.9% equity position in AIG and will charge a hefty interest rate.

Treasury Secretary Henry Paulson also stipulated that AIG CEO Robert Willumstad resign. Edward Liddy, former CEO of



, will replace Willumstad.

Earlier in the week, brokerage

Lehman Brothers


filed for bankruptcy and

Bank of America


staged a last-minute acquisition of

Merrill Lynch


. Fearing AIG may be next, investors sold the stock down 60% on Monday, then dropped it another 21% on Tuesday.

Late Tuesday, investment bank

Morgan Stanley


reported profits

that declined 7.7% year over year but beat expectations. Morgan Stanley had been facing pressure as other financial firms buckled.

Elsewhere, British bank



announced it would buy Lehman's North American businesses.

In the technology sector, memory-chip maker



rebuffed a $5.8 billion buyout bid by

Samsung Electronics

, saying Samsung has undervalued its business.

As for commodities, crude oil was adding $3.31 to $94.46 a barrel, and gold gained $6.80 to $787.30 an ounce.

In terms of economic data, the Census Bureau reported that building permits in the U.S. fell 6.2% to an annual rate of 895,000 -- a 17-year low -- in August. Economists were expecting a more modest decline to a rate of 925,000. Housing starts also dropped to 895,000, shy of analysts' forecasts for 950,000 new homes. The Energy Information Administration also is expected to release its weekly read on crude-oil inventory levels.

Longer-term U.S. Treasuries were mixed. The 10-year was even in price to yield 3.44%, and the 30-year was gaining 24/32, yielding 4.05%. The dollar was falling vs. the euro, yen and pound.

Overseas, European exchanges were gaining traction, as the FTSE in London and Dax in Frankfurt logged modest gains. The Nikkei in Japan closed higher, while Hong Kong's Hang Seng finished with losses.