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The start of earnings season has investors worried about how banks and brokerages have fared after suffering losses in the collapse of the subprime mortgage market. The nation's biggest financial institutions will report results next week, including Merrill Lynch & Co., Citigroup Inc. and JPMorgan Chase & Co.
Merrill Lynch might take a $15 billion hit from its exposure to soured subprime mortgage investments, according to a report in The Wall Street Journal. The nation's largest brokerage is also said to be seeking another capital infusion to help shore up its balance sheet.
Investors were also nervous after American Express Corp. warned late Thursday that slower spending and more delinquencies on credit card payments will hamper profit throughout 2008. This follows a similar announcement from rival Capital One Financial Corp., which set aside $650 million to prepare for unpaid credit card bills.
Bank of America Corp. agreed Friday to buy Countrywide Financial Corp. for $4 billion, a deal that rescues the country's largest mortgage lender. It comes just months after BofA invested $2 billion in Countrywide.
On Friday, Dow futures fell 70 points, or 0.54 percent, to 12,774.00. Broader indexes also indicated a lower open, with the Standard & Poor's 500 index futures falling 10.30, or 0.72 percent, to 1,410.70; and Nasdaq composite futures shed 11.00, or 0.56 percent, to 1,949.75.
Stocks have skidded lower so far this year, with the Dow often falling by triple digits, amid increasing anxiety about a possible recession as well as the continuing fallout from the mortgage crisis.
U.S. bond prices rose in European trading amid the continuing credit uncertainty. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.84 percent from 3.88 percent late Thursday.
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 Oil prices were under pressure, with a barrel of light, sweet crude for February delivery down 57 cents at $93.14 a barrel in premarket trading on the New York Mercantile Exchange.
Investors will also be watching economic data that could show the trade deficit increased slightly in November from the previous month, due largely to a surge in oil prices. The Commerce Department is scheduled to release its monthly report on international trade in goods and services, based on documents from U.S. Customs and Border Protection, at 8:30 am EST.
Also on Friday, Federal Reserve Governor Frederic Mishkin and Boston Fed President Eric Rosengren are set to make speeches during the session. They follow Fed Chairman Ben Bernanke, who on Thursday made clear in a speech that the central bank is poised to cut interest rates later this month.
Overseas, Japan's Nikkei stock average closed up 1.93 percent. Britain's FTSE 100 fell 0.69 percent, Germany's DAX index gave up 0.81 percent, and France's CAC-40 fell 0.58.
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[Associated Press; By JOE BEL BRUNO]
Copyright 2007 The Associated Press. All rights reserved. This
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