U.S. stocks head for lower open

2007-12-27 06:36:39 THE ASSOCIATED PRESS

NEW YORK - U.S. stock futures turned lower Thursday after the assassination of Pakistani opposition leader Benazir Bhutto. A marginal increase in durable goods orders also sent futures falling.

Bhutto's assassination raised the possibility of increasing political unrest abroad, always an unsettling prospect for investors. Oil and gold prices rose following the news.

Meanwhile, the Commerce Department said orders for durable goods X products expected to last at least three years X increased by just 0.1 percent last month. Economists had been looking for a rise of 2.2 percent. Still, November saw the first rise in durable-goods orders in the last four months.

The notion that the economy is slowing was also unnerving for the market.

Meanwhile, the Labor Department said the number of workers seeking unemployment benefits rose slightly last week.

Dow Jones industrial average futures fell 63, or 0.46 percent, to 13,580. Standard & Poor's 500 index futures fell 5.60, or 0.37 percent, to 1,504.10, and Nasdaq 100 index futures fell 2.50, or 0.12 percent, to 2,157.00.

Bond prices rose sharply as investors sought safety. The yield on the 10-year Treasury note, which moves opposite its price, fell to 4.19 percent from 4.29 percent late Wednesday. The dollar fell against other major currencies, while gold prices rose.

Wall Street is also awaiting a weekly reading on domestic crude oil inventories.

Light, sweet crude rose 48 cents to $96.45 per barrel in pre-opening trading on the New York Mercantile Exchange.

The decline in stock futures comes during a holiday-shortened week that has seen light volume. Stocks have managed to post gains for the past four trading days, posting a modest increase Wednesday as investors tried to reconcile their expectations with somewhat disappointing results from retailers.

The battered financial sector could again command some of Wall Street's attention Thursday following predictions by Goldman Sachs that the flood of writedowns at banks will continue.

Goldman predicted Citigroup Inc. may be forced to write off 70 percent more than the $8 billion to $11 billion Citi forecast in early November. Citi could also cut its dividend by 40 percent and may need to raise $5 billion to $10 billion more cash, Goldman estimates.

Citi shares fell more than 2 percent in electronic trading before the opening bell.

In other corporate news, Sallie Mae said it would sell $2.5 billion in stock and use a bulk of the proceeds to settle contracts requiring the company to buy back stock at prices above current levels. The student lender, officially known as SLM Corp., shares hit a five-year low last week amid concerns about the company's plans following a the collapse of a $25 billion buyout deal.

Sallie Mae shares fell more than 10 percent in electronic trading.

Overseas, Japan's Nikkei stock average fell 0.57 percent. In afternoon trading, Britain's FTSE 100 rose 0.17 percent, Germany's DAX index gained 0.50 percent, and France's CAC-40 added 0.19 percent.