Stocks head for mixed open following Senate vote

[October 02, 2008]  NEW YORK (AP) -- U.S. stocks headed for a mixed open Thursday and credit markets appeared steady as investors awaited readings on unemployment and factory orders. Investors also digested the Senate's overwhelming approval of a $700 billion financial rescue package, which now moves to the House.

The version of the bill that the Senate passed in a 74-25 vote late Wednesday added $100 billion in tax breaks for businesses and the middle class. It also the limit on federal deposit insurance to $250,000 from $100,000.

Party leaders are hoping that sweetening the plan will make it more palatable to some of the 133 House Republicans who rejected the plan in a vote Monday that took Wall Street, and many on Capitol Hill, by surprise.

Backers say the plan to let the government buy billions of dollars in bad mortgage debt and other now-toxic assets to help unclog the world's frozen credit markets. Banks are fearful of making loans because of worries they won't recoup their money. That, in turn, is weighing on the economy, limiting the availability of cash to businesses and consumers alike.

The House is expected to vote again on the measure Friday.

Nervous investors have sought safety in government debt, though demand appeared stable early Thursday. The yield on the 3-month T-bill, the safest type of investment, stood unchanged at 0.79 percent from late Wednesday. Still, the historically low yields indicate investors' are willing to accept the smallest of yields to safeguard their money.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, remained unchanged at 3.74 percent from late Wednesday.

Dow Jones industrial average futures slipped 30, or 0.28 percent, to 10,857. Standard & Poor's 500 index futures fell 3.70, or 0.32 percent, to 1,164.70. Nasdaq 100 index futures rose 8.75, or 0.55 percent, to 1,587.50.

The dollar was higher against other major currencies, particularly the euro, ahead of a decision on interest rates Thursday by the European Central Bank.

Beyond the events in Washington, investors were awaiting a report on demand at the nation's factories. Wall Street expects that factory orders fell by 2.5 percent in August, according to the consensus of economists surveyed by Thomson/IFR.

The Commerce Department report is due at 10 a.m. EDT.

Investors also will look to a report on the labor market. Economists, on average, expect the Labor Department will show that claims for unemployment benefits declined by 18,000 last week to a seasonally adjusted level of 475,000.

The jobs report is expected at 8:30 a.m.

The well-being of the labor market is a key concern for investors as increased unemployment could dent consumer spending, which accounts for more than two-thirds of U.S. economic activity.

Overseas, Japan's Nikkei stock average fell 1.88 percent. In morning trading, Britain's FTSE 100 rose 1.46 percent, Germany's DAX index rose 0.78 percent, and France's CAC-40 advanced 1.31 percent.

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[Associated Press; By TIM PARADIS]

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