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Wall Street poised for mixed open on Freddie loss

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[August 06, 2008]  NEW YORK (AP) -- Wall Street headed for a mixed open Wednesday after troubled mortgage financier Freddie Mac reported a larger-than-expected second-quarter loss.

DonutsFreddie Mac, which substantially increased its reserves for souring loans, said earnings fell $821 million, or $1.63 per share, compared with a profit of $729 million, or 96 cents per share, in the year-ago period. Analysts surveyed by Thomson Financial had expected a loss of 53 cents a share.

Freddie Mac and sister company Fannie Mae, which hold or back nearly half of all U.S. mortgage debt, have lost billions of dollars due to failed loans over the past year. The federal government has pledged to help both companies with larger lines of credit or stock purchases if necessary.

The problems at both companies have contributed to the volatility on Wall Street in recent months. The market appeared calm early Wednesday, having soared the previous session on a reassuring economic statement from the Federal Reserve and another drop in oil prices. The Dow Jones industrials shot up more than 330 points; some pullback was to be expected after a huge move upward.


Other earnings reports early Wednesday were mixed. Time Warner Inc. said second-quarter earnings fell 26 percent on declining subscriber fees at its AOL online unit and lower ad revenue at the Time publishing business. The results beat analysts' expectations, however.

Wireless carrier Sprint Nextel reported a larger-than-expected second-quarter loss on severance and other costs.

In premarket trading, Dow futures fell 38, or 0.33 percent, to 11,547.

The Standard & Poor's 500 index futures fell 3.50, or 0.27 percent, to 1,279.40, and the Nasdaq 100 index futures rose 4.50, or 0.24 percent, to 1,873.50.

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Bonds rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4 percent from 4.02 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

Investors are also keeping an eye on crude oil after prices fell sharply in the last two sessions.

Light, sweet crude for September delivery rose a penny to $119.18 in premarket electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average rose 340.23, or 2.63 percent, to 13,254.89. In afternoon trading, Britain's FTSE 100 was up 9.30, or 0.17 percent, to 5,463.80. Germany's DAX index fell 7.92, or 0.12 percent, to 6,510.78, and France's CAC-40 rose 12.52, or 0.29 percent, to 4,398.87.


On the Net:

New York Stock Exchange: http://www.nyse.com/

Nasdaq Stock Market: http://www.nasdaq.com/

[Associated Press; By STEVENSON JACOBS]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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