Stock futures point to sharply lower open

[December 12, 2008]  NEW YORK (AP) -- A dejected stock market headed for a plunge at the opening of trading Friday as the Senate's rejection of a $14 billion lifeline for the auto industry intensified investors' concerns about a deepening recession.

The defeat of the bailout bill late Thursday has prompted calls from lawmakers for the Bush administration to use a portion of the $700 billion financial rescue package to prop up the struggling companies. The bill failed after the United Auto Workers refused to meet Republican demands for big wage cuts.

General Motors Corp. and Chrysler LLC have said they could run out of cash within weeks without government help. Ford Motor Co., which would also be eligible for aid under the bill, has said it has enough cash to make it through next year.

The failure of the bill is feeding investors' concerns about job losses. More evidence of the ravaged labor market came late Thursday, as Bank of America Corp. said it expected to cut as many as 35,000 jobs over the next three years, including some from investment bank Merrill Lynch & Co., which it agreed to buy in September.

Dow Jones industrial average futures dropped 310, or 3.61 percent, to 8,287. Standard & Poor's 500 index futures fell 40.40, or 4.62 percent, to 834.10, while Nasdaq 100 index futures fell 45.00, or 3.78 percent, to 1,145.00.

Meanwhile, more glum economic data is expected Friday. The Commerce Department will release its retail sales report for November at 8:30 a.m. EST. The Labor Department is expected to release the producer price index for November at the same time. Later Friday morning, the Commerce Department will issue its report on business inventories for October.

The Commerce Department is expected to report that retail sales fell in November for a fifth-straight month despite a surge of shoppers over the Thanksgiving weekend. The report is a closely watched gauge considering that consumer spending drives more than two-thirds of the U.S. economy.

The reports will follow a bleak report from the Labor Department Thursday that said initial jobless claims rose to the highest level in 26 years last week.

Bond prices were mixed Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.51 percent from 2.63 percent late Thursday. The yield on the three-month T-bill was unchanged from late Thursday at 0.02 percent. The bill has been in great demand because of the safety it offers investors.

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

Light, sweet crude fell $2.58 to $45.40 in electronic premarket trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average plunged 5.56 percent. In afternoon trading, Britain's FTSE 100 was down 3.92 percent, Germany's DAX index was down 4.80 percent, and France's CAC-40 was down 5.35 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 SARA LEPRO]

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