Stocks head for lower open after sharp rally

[November 05, 2008]  NEW YORK (AP) -- Wall Street prepared to cash in some of the previous session's big gains Wednesday, focusing on the weak economy after Barack Obama's election to the White House.

Tuesday's election results were not surprising to the market, except perhaps in terms of the wide margin by which Obama beat his opponent John McCain. Rather, investors appeared to be focusing again on the economy's troubles, and the fact that stocks have recovered so sharply despite dismal data.

More grim readings are anticipated this week. After revealing the worst contraction in manufacturing sector activity in 26 years, the Institute for Supply Management is expected at 10 a.m. Eastern time Wednesday to report that the service sector shrank in October after expanding marginally in the previous month.

And later this week, the Labor Department releases its highly anticipated report on October job losses, which are predicted to be massive following a freeze-up in the credit markets that crimped many companies' ability to get financing. Economists on average expect a 200,000 drop in payrolls, according to Thomson/IFR.

Ahead of the market's open, Dow Jones industrial futures fell 82, or 0.86 percent, to 9,505. Standard & Poor's 500 index futures fell 13.90, or 1.39 percent, to 989.30, while Nasdaq 100 index futures fell 13.50, or 0.98 percent, to 1,367.00.

Stocks rallied Tuesday, with many investors believing that the worst of this year's financial crisis -- at least at the systemic level -- is behind them. Some on Wall Street are preparing for a traditional year-end rally despite the economy's problems.

The S&P 500, which on Tuesday closed above the 1,000 mark for the first time since Oct. 13, has soared 18.3 percent in the past six sessions.

Obama, who won with well over 300 electoral votes, faces an enormous budget deficit when he is sworn in Jan. 20. The current administration Wednesday will detail its plans to borrow a record $550 billion in the final three months of the year for the financial rescue efforts made in response to the global crisis. A Treasury Department official Monday projected the government would need to borrow an additional $368 billion in the first quarter of 2009.

On Wednesday, the dollar rose against most other major currencies, while gold prices rose.

Light, sweet crude fell $2.12 to $68.40 a barrel in premarket electronic trading on the New York Mercantile Exchange.

In Asian trading, Japan's Nikkei index rose 4.46 percent, and Hong Kong's Hang Seng Index rose 3.17 percent. In morning trading in Europe, Britain's FTSE 100 fell 1.88 percent, Germany's DAX index fell 1.28 percent, and France's CAC-40 fell 2.32 percent.

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On the Net:

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

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

[Associated Press; By MADLEN READ]

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