Stocks head for lower open after gains

[October 31, 2008]  NEW YORK (AP) -- Wall Street looked to lock in some of its gains from the week Friday as investors awaited data on personal spending as well as details on a possible government plan to help struggling homeowners.

With the major stock market indexes up more than 8 percent after a huge rally Tuesday and further gains Thursday, some profit-taking wasn't a surprise. And while stock futures pointed to a fairly large pullback, thin trading volume and the market's enormous volatility for more than a month have upended even many short-term market predictions. Selling by hedge funds and mutual funds has also led to some of the market's ups and downs.

Dow Jones industrial average futures fell 124, or 1.3 percent, to 9,102. Standard & Poor's 500 index futures fell 14, or 1.5 percent, to 947.50, and the Nasdaq 100 index futures fell 26, or 1.9 percent to 1,319.00.

A Commerce Department report on personal spending could help shape sentiment, though Wall Street likely doesn't need another reminder that consumers are pulling back. From reports this week on flagging consumer confidence to data on an economy made smaller by a drop in how much consumers pull out of their wallets, Wall Street is aware that Americans are fearful about the economy and their shrinking investment portfolios.

Economists polled by Thomson/IFR predict that personal spending fell by 0.2 percent in September after being unchanged in August.

A second report this week on consumer sentiment, from the University of Michigan, is due at 10 a.m. EDT and is likely to offer further evidence of widespread unease.

A continued pullback among consumers, particularly heading into the holiday season, would be unwelcome for investors as consumer spending accounts for more than two-thirds of U.S. economic activity.

But Wall Street is also looking for signs of how the government might help troubled homeowners, as the weak housing market is a source of worry for many consumers and a cause of some of the retrenchment in spending.

Federal Reserve Chairman Ben Bernanke is scheduled to speak by satellite Friday to a Berkeley, Calif., conference on the mortgage crisis and is likely to press government officials and lawmakers to continue working on ways to provide more relief.

The Bush administration is mulling a proposal that would help around 3 million homeowners avoid foreclosure by having the government guarantee billions of dollars worth of distressed mortgages.

Even with the prospect of government aid for homeowners, investors remained cautious Friday. The yield on the three-month Treasury bill, regarded as the safest investment around and an indicator of investor sentiment, was flat at 0.37 percent from late Wednesday. Meanwhile, the yield on the benchmark 10-year Treasury note fell to 3.89 percent from 3.97 percent late Wednesday, indicating increased demand.

The dollar was higher against other major currencies, while gold prices fell.

Light, sweet crude fell $2.74 to $63.22 in premarket electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 5.01 percent. In morning trading, Britain's FTSE 100 fell 1.79 percent, Germany's DAX index fell 0.13 percent, and France's CAC-40 fell 1.81 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 TIM PARADIS]

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