Stock futures mixed on bailout hopes, GE outlook

[September 25, 2008]  NEW YORK (AP) -- Wall Street headed for a narrowly mixed open Thursday as investors grew cautiously optimistic that the government and lawmakers would strike a deal to save the crippled financial system. But credit markets remained squeezed on worries that lingering obstacles to the bank bailout package could hinder its effectiveness.

Meanwhile, a sobering outlook from General Electric Co. reminded the market of the far-reaching effects of the more than year-old credit crisis.

Investors were mildly hopeful that the $700 billion bailout would win approval, albeit with some important changes, following two days of testimony on Capitol Hill by the country's top economic leaders. The momentum intensified Thursday as President Bush summoned congressional leaders to a meeting aimed at securing the legislation.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke urged lawmakers on Tuesday and Wednesday to quickly sign off on the plan, which would help prop up the economy by removing billions of dollars in risky mortgage-related assets from financial firms' balance sheets.

White House officials have yielded to a key demand by congressional leaders, agreeing to include widely supported limits on pay packages for executives whose companies benefit. Major elements are still being worked out, including how to phase in the mammoth cost of the package and a plan to let the government take an ownership stake in troubled companies as part of the rescue.

GE announced that it was lowering its outlook for third-quarter and full-year earnings, citing unprecedented weakness and volatility in the financial services markets. That disappointing news shaved some of the gains in stock index futures.

Dow Jones industrial average futures rose 5.00, or 0.04 percent, to 10,865. The Dow fell 29 points on Wednesday.

The Standard & Poor's 500 index futures fell 0.70, or 0.06 percent, to 1,192.30, and the Nasdaq 100 index futures rose 8.50, or 0.51 percent, to 1,680.50.

In credit markets, demand remained strong for the 3-month Treasury bill, considered the safest short-term investment, with the yield holding flat from Wednesday's trading at 0.49 percent. That means investors are still willing to earn the slimmest of returns in exchange for a safe place to put their money. The yield on the benchmark 10-year Treasury note fell to 3.80 percent from 3.81 percent late Wednesday.

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

Light, sweet crude for November delivery fell $1.59 to $104.14 in premarket electronic trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average was down 0.90 percent. Britain's FTSE 100 was up 0.07 percent, Germany's DAX index was up 1.39 percent, and France's CAC-40 was up 0.90 percent.

[Associated Press; By STEVENSON JACOBS]

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