Futures slip as oil rises (Reuters)
28.08.2008 16:10 Finance
Investors were awaiting weekly data on the number of people claiming unemployment benefits and a report on second-quarter gross domestic product for more clues on the state of the economy. Both reports are due at 8:30 a.m. EDT.
Oil rose toward $120 a barrel, boosted by the threat of damage to U.S. oil installations in the Gulf of Mexico from Tropical Storm Gustav, spurring concerns about the impact of higher fuel costs on consumer spending and corporate profits.
Fannie Mae announced management changes on Wednesday in an effort to better implement a plan to preserve capital and cut losses. On Thursday Lehman Brothers (LEH.N) said Fannie's capital and reserve positions are better than market perceptions, adding that it may not need any more externally raised capital. Fannie shares rose 3 percent in Europe.
"We've got energy prices up again, and we'll be getting a couple of pieces of important economic data, in particular the jobless claims," said Arthur Hogan, chief market analyst at Jefferies & Co.
"Away from that, financials have been celebrating Fannie Mae's management shake-up -- it shows that Fannie Mae is trying to get the ship moved in the right direction."
S&P 500 futures edged down 0.20 point and were slightly below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures slipped 8 points and Nasdaq 100 futures slipped 2.25 points.
Apart from the higher price of oil, a weaker-than-expected profit from Sears Holdings Corp (SHLD.O) could also weigh on consumer-related companies. Sears profit fell short of expectations as it cut prices to lure shoppers amid a U.S. housing slump that hurt appliance and tool sales.
Financial services companies could also get a boost from bond insurerMBIA Inc's (MBI.N) announcement late on Wednesday that it plans to reinsure a $184 billion portfolio of investment-grade U.S. public finance credits. Shares of MBIA rose 9.2 percent in European trading.
Shares of Fannie and its smaller counterpart Freddie Mac (FRE.N) have rallied in past sessions on hope that there will be no government bailout that would wipe out shareholder value.
European stocks fell on higher oil prices and as UK housing data knocked the sterling to a 12-year low. Asian stocks continued to languish around two-year lows.
U.S. stocks rose on Wednesday as surprisingly strong data on durable goods orders soothed some concern about the sluggish economy while Fannie Mae and Freddie Mac led a rally in financial shares.
(Editing by Kenneth Barry)
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