Stock Futures Point to Downside Open

Updated from 7:00 a.m. EDT

Premarket futures were forecasting a lower open for stocks in New York Friday after Thursday's big rally, following the week's pattern of violently volatile trading.

Futures for the S&P 500 were down 9.9 points at 931 and were 17 points below fair value. Nasdaq futures were lower by 26 points at 1297 and were 23 points short of fair value.

On Thursday, stocks staged a rally in the final hour of an erratic session, as traders examined a mass of earnings statements and discouraging economic data.

Trouble in the financials persisted ahead of the new day's session. Bond insurer Ambac ( ABK), along with some of its competitors, was working to petition the Treasury Department so that it could sell troubled assets to the government, according to a report by Bloomberg.

As earnings season hit full stride, Capital One ( COF) posted a third-quarter profit that missed analysts' expectations.

Earnings from the tech sector also were in the spotlight. IBM ( IBM) said it would meet full-year estimates after reporting increased third-quarter profit on cost reductions and strong international sales.

Meanwhile, Internet search firm Google ( GOOG) beat estimates for the third quarter and said that its business could withstand a recession.

Sony Ericsson, a joint venture between Sony ( SNE) and Ericsson ( ERIC), reported a third-quarter loss on restructuring charges.

Defense firm Honeywell ( HON) saw income rise year over year and beat analyst estimates.

Oil-services company Schlumberger ( SLB) announced rising profit on a substantial increase in revenue.

Beyond earnings, The Wall Street Journal reported that General Motors ( GM) was ramping up merger discussions with Chrysler.

Ford ( F) plans on selling shares in Mazda to Japanese firms, according to a report in Reuters that cited local media.

In the pharmaceutical space, Pfizer ( PFE) agreed to pay $894 million to settle legal claims related to adverse effects of its Celebrex and Bextra.

Looking to the day's economic data, the Census Bureau reported that September building permits came in at an annualized rate of 786,000, down from 857,000 in August and below analyst estimates. New-home starts were estimated at 817,000, hitting a 17-year low. A bit later, traders will take in an October consumer sentiment reading from the University of Michigan.

Credit markets continued to loosen slightly, as three-month dollar Libor, a measure of the rate banks charge one another for large loans, dropped 8 basis points to 4.42%. Overnight Libor was lower by 27 basis points to 1.67%.

As for commodities, crude oil was up 55 cents to $70.40 a barrel. Gold was down $22.50 to $782 an ounce.

Longer-dated U.S. Treasury securities were rising in price. The 10-year was up 8/32 to yield 3.93%, and the 30-year was gaining 10/32, yielding 4.24%. The dollar was weaker vs. the pound and yen but gathering strength against the euro.

Abroad, European exchanges were edging higher. The FTSE in London and the Dax in Frankfurt were both trading with gains. Looking at Asian stocks, Japan's Nikkei closed on the upside, while the Hang Seng in Hong Kong finished with losses.

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