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) - Get Report

and

Goldman Sachs

(GS) - Get Report

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) - Get Report

,

Wells Fargo

(WFC) - Get Report

appeared set to buy

Wachovia

(WB) - Get Report

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) - Get Report

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.

Earnings season continued amid the financial turmoil, as industrial bellwether

General Electric

(GE) - Get Report

reported third-quarter earnings that declined 12% year over year but were in line with revised estimates.

As for analyst actions, Wells Fargo, along with insurance and credit services firms such as

State Auto

(STFC) - Get Report

,

Erie Indemnity

(ERIE) - Get Report

,

Donegal Group

(DGICA) - Get Report

and

Advanta

( ADVNB) all caught upgrades from Stifel Nicolaus.

Looking at economic data, the Census Bureau's report on the trade balance for August showed a deficit of $59.1 billion, whereas the economy registered a $62.2 billion deficit in July. Economists had anticipated an August deficit of $59 billion. The Bureau of Labor Statistics also reported that export prices excluding agricultural goods declined 1% in September. Import prices excluding oil dropped 0.9%.

In commodities, crude oil was down $3.75 to $82.84 a barrel. Gold was climbing $19 to $905.50 an ounce.

Longer-dated U.S. Treasury securities were mixed. The 10-year was down 16/32 to yield 3.84%, and the 30-year was gaining 1/32, yielding 4.1%. The dollar was climbing vs. the euro and pound, but falling sharply against the yen.

Overseas, European markets were taking it on the chin. The FTSE in London and the DAX in Frankfurt were each down more than 7.6%. In Asia, Japan's Nikkei and Hong Kong's Hang Seng also closed with broad losses.