Stocks head for lower open as Morgan Stanley posts 4Q loss
NEW YORK -- Stock was poised to open lower Wednesday as investors awaited results from the Federal Reserve credit auction held Monday and digested Morgan Stanley's dismal fourth-quarter earnings.
Because of its losing bets on mortgages, Morgan Stanley was forced to take a much larger-than-expected writedown of $9.4 billion, which led to a quarterly loss. The investment bank's shares wavered in pre-market trading, though, with investors disappointed by the results but pleased to hear that the company got a $5 billion investment from China's government-controlled investment vehicle, China Investment Corp.
Investors were also interested to see how much of the $20 billion the Fed offered in 28-day credit on Monday was taken by commercial banks. With Wall Street in such a somber mood these days, any result could be taken as a worrisome sign; investors could interpret strong interest on the part of commercial banks as desperation, or weak interest as a sign that the Fed's move was ineffective.
Dow Jones industrial futures fell 29, or 0.22 percent, to 13,299, while Standard & Poor's 500 index futures lost 3.80, or 0.26 percent, to 1,462.00. Nasdaq 100 futures slipped 0.25, or 0.01 percent, to 2,050.00.
On Tuesday, stocks finished higher on relief that the European Central Bank was willing to issue $500 billion in 16-day loans to banks, but it was a volatile session due to the prospect of a U.S. recession next year.
The dollar rose against other most major currencies, except the yen. Gold prices fell.
Light, sweet crude rose 30 cents to $90.38 a barrel in premarket trading on the New York Mercantile Exchange.
There is little in the way of economic data Wednesday, but Wall Street will be paying attention when Treasury Secretary Henry Paulson speaks in Los Anglese about trade, and when Richmond Fed President Jeffrey Lacker speaks in Charlotte on the outlook for the U.S. economy.
Overseas, Japan's Nikkei stock average fell 1.17 percent, and Hong Kong's Hang Seng index rose 1.11 percent. Britain's FTSE 100 dipped 0.01 percent, Germany's DAX index slid 0.13 percent and France's CAC-40 rose 0.01 percent.
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