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 There also is nervousness about what impact a recent sharp slide for the dollar and a robust commodities rally
-- including a jump in crude oil prices to $103 a barrel -- will have on the economy and companies. And there are new reports later in the morning on personal spending, manufacturing activity and consumer sentiment that also could shape the direction of trade.
Stocks overall have performed better in February than in January, when credit market turmoil took a heavy toll on the major averages. But disappointing earnings results released late Thursday could cast a pall over the market and cause stocks to end the month on a wary note.
Insurer AIG announced a $5.29 billion quarterly loss and took a massive charge to account for its estimated exposure to credit derivatives. The loss caught analysts off guard as many had expected the company to report a profit.
Computer maker Dell had a 6 percent decline in quarterly profit and warned that its business could suffer from reduced customer spending. The company's most recent earnings also failed to meet analysts' expectations.
The futures contract for the Dow Jones industrial average fell 90 points, or 0.7 percent, to 12,487. Futures contracts for the Standard & Poor's 500 dropped 11.2 points, or 0.8 percent, to 1354.60 and the Nasdaq 100 lost 12 points, or 0.7 percent, to 1,772.2.
On Thursday, stocks sank as investors fretted over a rise in unemployment claims and the prospect of more bank failures. Federal Reserve Chairman Ben Bernanke warned that while large U.S. banks will likely recover from the recent credit crisis, other banks are at risk of failing.
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 The euro traded at $1.5215 in London, after reaching new highs on Thursday. The slide in the dollar has sent commodities prices soaring, and on Friday took oil to $103 a barrel for the first time.
Some relief for the ailing bond insurance industry is on the way. Billionaire investor Wilbur Ross agreed to invest up to $1 billion investment in Bermuda-based reinsurer Assured Guaranty Ltd. Assured does not have as much exposure to bad subprime debt as some of its rivals, but the deal still shows investors are willing to pump capital into an industry whose troubles have hurt many classes of normally stable debt.
Thomson/IFR is forecasting that the Commerce Department's personal income report will show a 0.2 percent rise in January, which would be down from a 0.5 percent gain in December. Personal consumption is expected to rise by 0.2 percent also for the month and that would match the prior month's gain.
The University of Michigan's final consumer sentiment reading for February is expected to fall to 69 from 69.6.
The Chicago purchasing managers index for this month is expected to have a reading of 48.5, which would show that the factory sector is shrinking in that region. The report is seen as a precursor of the national Institute for Supply Management report, due out Monday.
There were heavy losses in overseas trade. Tokyo's Nikkei closed down 2.32 percent. London's FTSE lost 1.06 percent, Paris' CAC 40 gave up 1.15 percent and Frankfurt's DAX forfeit 1.24 percent.
[Associated Press; By LESLIE WINES]
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