Stocks head for lower open before Fed's first credit auction
NEW YORK -- Wall Street was poised to extend its losses Monday as investors remained skeptical that the Federal Reserve's first credit auction will be effective in loosening up a tight market.
The Fed is scheduled Monday to offer $20 billion in 28-day credit through an auction, and bids will be accepted between 10 a.m. and 1 p.m. EST. The aim of the auction is to spur commercial banks to borrow from the central bank, and in turn, encourage increased lending on the part of the banks to businesses and consumers.
Last week, the Fed disappointed investors by lowering the interest rates by a quarter-point, which was less than some investors expected. Wall Street is pleased that policy makers say they are continuing to try to boost market confidence, which has dwindled since home foreclosures started soaring, but the market is so far unconvinced that the auction tactic will work.
A speech Sunday night by former Fed Chairman Alan Greenspan likely added to the market's ill humor. Greenspan said that "stagflation" -- simultaneous inflation and economic slowdown -- is a possibility, given last week's data showing spiking consumer prices.
Dow Jones industrial futures fell 58, or 0.43 percent, to 13,382, while Standard & Poor's 500 index futures 8.60, or 0.58 percent, to 1,469.80. Nasdaq 100 futures fell 10, or 0.48 percent, to 2,083.80.
Last week, the Dow dropped 2.10 percent, the S&P 500 index fell 2.44 percent and the Nasdaq lost 2.60 percent.
The dollar was higher against most other major currencies Monday, while gold prices fell.
Light, sweet crude fell 45 cents to $90.82 a barrel in premarket electronic trading on the New York Mercantile Exchange.
In economic data, the U.S. government will report Monday morning on the current account deficit, which is expected to narrow. And Monday afternoon, the National Association of Home Builders is scheduled to release its housing market index, which is expected to hold steady.
Overseas, Japan's Nikkei stock average fell 1.71 percent, and Hong Kong's Hang Seng index fell 3.51. Britain's FTSE 100 dropped 1.24 percent, Germany's DAX index lost 1.34 percent and France's CAC-40 declined 1.40 percent.