Bracing for another day of struggle

NEW YORK (CNNMoney.com) -- U.S. stocks are set for another rough day Friday on new worries about a credit crunch putting a squeeze on corporate deals, although a report showing good demand for big ticket items could help trading at the open.

At 8:31 a.m. ET, futures were relatively flat, with a comparison to fair value pointing to a slightly higher start for Wall Street. Futures moved out of negative territory after a stronger than expected report on orders for durable goods.

Still the direction of markets Friday could be set by a reading due soon after the market open on the state of the battered real estate and home building industries.

Home Depot's (Charts, Fortune 500) sale of its wholesale distribution unit was still in doubt early Friday, which could exacerbate investor worries that a credit crunch will continue to put the brakes on corporate buyouts, especially by private equity firms.

Negotiations over financing has turned hostile, the Wall Street Journal reported, as it appeared the home improvement retailer, already struggling with reduced sales due to the downturn in housing and home building, could end up taking $1.2 billion less than previously agreed to for the sale of the unit. Shares of the Dow component were off 0.6 percent in early Frankfurt trading Friday.

At 10 a.m. ET there will be another closely watched reading on the state of the battered real estate and home building markets when the Census Bureau reports on new home sales. Economists surveyed by Briefing.com forecast the pace of sales fell to an annual rate of 825,000 in July, down from 834,000 in June. If that forecast is correct, it would mark the lowest pace of those sales since June 2000.

Earlier Friday, Census Bureau reported a much bigger than expected jump in durable goods orders, a rise of 5.9 percent in July. Economists forecast a 1.0 percent rise, a bit slower than the 1.4 percent gain in June.

In other corporate news, retailer Gap (Charts, Fortune 500) reported improved earnings after the close Thursday that met forecasts, as it raised its earnings guidance for the fiscal year by 5 cents a share and announced a share buyback program. Shares of Gap gained 2.5 percent in after-hours trading following the report.

Top-rated banks borrowed an average of $1.2 billion per day from the Federal Reserve during the week ended Aug. 22, the highest level since September 2001 in the wake of the terrorist attack then, according to figures released late Thursday from the central bank.

The Fed last week lowered the discount rate, or the rate at which it lends directly to banks, by a half percentage point, to ease concerns in credit markets. The nation's four biggest banks, Citigroup (Charts, Fortune 500), Bank of America (Charts, Fortune 500), JP Morgan Chase (Charts, Fortune 500) and Wachovia (Charts, Fortune 500), said they borrowed billions from the Fed in an effort to remove the stigma of getting short-term financing at the discount window. All four banks emphasized they have access to other, cheaper funds.

Still, lingering credit concerns wiped out an early rally on Wall Street Thursday, leading to an afternoon sell-off that left stocks slightly lower for the day.

Wall Street's weak performance spilled over to Asia, where stocks fell for the first time this week on Friday. In Europe, major markets struggled in morning trading.

A senior official in charge of a structured finance team at Barclays Capital, the investment banking arm of British bank Barclays Plc, has quit amid the recent credit market turmoil, taking shares of Barclays down 1.1 percent in early trading in London.

Treasuries were little changed after the durables report, leaving the yield on the 10-year note near the 4.64 percent level reached late Thursday. The dollar was lower against the euro but up against the yen in early trading.

Oil prices rallied back near the $70 a barrel mark after the durables report, taking U.S. light crude up 9 cents to $69.92 a barrel in electronic trading.