Stocks headed for a slightly lower open Tuesday as investors, anxious about the nation's stumbling banks, found only modest relief after Federal Reserve Chairman Ben Bernanke said the Fed might extend its lending efforts to investment banks.
Bernanke, speaking at a mortgage lending forum hosted by the Federal Deposit Insurance Corp., said the Fed is considering giving Wall Street firms more time to draw emergency loans from the central bank.
Still, the market remains worried about the banking industry, particularly ahead of second-quarter earnings season, which starts when Alcoa Inc.'s results are released after the market closes Tuesday.
The idea that government-sponsored lenders Freddie Mac and Fannie Mae might need to raise more capital amid worsening credit conditions sent their stocks plummeting on Monday. And later in the afternoon, cash-strapped IndyMac Bancorp Inc. said it is no longer accepting new mortgage loan submissions and is cutting 3,800 jobs _ more than half its work force.
Giving investors more reason to avoid the financial sector Tuesday was a gloomy report from a Wachovia analyst on Merrill Lynch & Co. The analyst lowered his earnings estimates for the investment bank _ which has already lost billions after investing heavily in securities backed by mortgages and other risky debt _ and predicted it will have to write down the value of its assets even further.
Ahead of the U.S. market's open, Dow Jones industrial average futures fell 12, or 0.11 percent, to 11,193. Standard & Poor's 500 index futures fell 0.10, or 0.01 percent, to 1,251.70, while Nasdaq 100 index futures fell 0.5, or 0.03 percent, to 1,831.80.
Investors are also awaiting a 10 a.m. Eastern time report from the National Association of Realtors on pending home sales in May. The report is expected to show a decline.
After a very erratic day of trading, the Dow finished Monday with a moderate loss, keeping the blue-chip index entrenched in bear market territory. A bear market is traditionally defined as a drop of 20 percent from its last peak.
Bond prices fell Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.92 percent from 3.91 percent late Monday.
Oil extended Monday's losses. Light, sweet crude fell $2.88 to $138.49 a barrel in premarket electronic trading on the New York Mercantile Exchange, after falling about $4 a barrel a day earlier.
The dollar was mixed against other major currencies, while gold prices edged lower.
In corporate news Tuesday, Siemens AG said it would eliminate nearly 17,000 jobs, or more than 4 percent of the industrial conglomerate's global work force. The move is aimed at lowering costs by nearly $2 billion amid the slowing economy.
The anemic economy also led Office Depot Inc. to forecast a nearly 10 percent drop in quarterly sales at the office supplies retailer's North American stores that have been open at least a year.
Stock markets overseas dropped on Tuesday. Japan's Nikkei stock average finished down 2.45 percent, and in midday trading, Britain's FTSE 100 fell 1.14 percent, Germany's DAX index fell 1.57 percent and France's CAC-40 fell 1.53 percent.
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