US stocks head for lower open after Tuesday's pop
NEW YORK -- U.S. stocks were poised to open lower Wednesday as investors prepared to take profits following Tuesday's pop on Wall Street.
However, Morgan Stanley posted a quarterly profit that bested the average analyst estimate, and stock market futures pared their losses. Morgan Stanley's results indicated that the bank is relatively healthy like Lehman Brothers Holdings Inc. and Goldman Sachs & Co., rather than at risk of failure like the recently bought out Bear Stearns Cos.
On Tuesday, Lehman's and Goldman's better-than-expected profit reports helped send the Dow Jones industrial average up 420 points -- the index's biggest point gain in more than five years. The Dow got an extra boost after the Federal Reserve cut its key interest rate by three-quarters of a percentage point.
Still, given magnitude of Tuesday's gain and the unknowns that remain about the financial industry and the overall economy, a pullback in stocks is expected.
Dow Jones industrial average futures fell 49, or 0.40 percent, to 12,356. Standard & Poor's 500 index futures fell 4.90, or 0.37 percent, to 1,329.10, while Nasdaq 100 index futures fell 6.00, 0.34 percent, to 1,765.00.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which move opposite its price, fell to 3.43 percent from 3.50 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell $1.72 to $107.70 per barrel in premarket electronic trading on the New York Mercantile Exchange.
Late Tuesday, Visa Inc. launched the largest initial public offering in U.S. history, selling 406 million shares at $44 each to raise $17.9 billion. The world's largest credit card processor -- unlike Discover Financial Services, which releases earnings on Wednesday, and American Express Co. -- is not a lender, and many investors are betting that it will easily survive the faltering U.S. economy and credit climate.
The Fed has slashed key rates by more than half since last summer, when the mortgage crisis claimed its grip on the global credit markets. But the housing and lending industries are still hurting.
The government is expected on Wednesday to loosen the capital restraints on mortgage-finance companies Fannie Mae and Freddie Mac, so they can play larger roles in the struggling housing market. The Office of Federal Housing Enterprise Oversight, which oversees the government-sponsored companies, was announcing the plan Wednesday, people familiar with the matter said Tuesday.
Meanwhile, after JPMorgan Chase & Co.'s announcement Sunday that it was buying out the troubled investment bank Bear Stearns Cos., French bank BNP Paribas SA said Wednesday it is no longer interested in making a takeover bid for rival, Societe Generale. Societe Generale has been hurting from exposure to toxic credit markets and a $7 billion loss blamed on a rogue futures trader.
Stock markets overseas were mixed after Wall Street's jump on Tuesday. Japan's Nikkei stock average increased 2.48 percent, while Hong Kong's Hang Seng index rose 2.26 percent. In afternoon trading, Britain's FTSE 100 slipped 1.26 percent, Germany's DAX index lost 1.05 percent, and France's CAC-40 declined 0.91 percent.