Skittish on Wall Street

NEW YORK (CNNMoney.com) -- Stocks were poised for a lower open Tuesday as Federal Reserve officials voiced new worries about the economy, drugmaker Merck gave disappointing 2008 guidance, and lawmakers turned their sights on credit card debt as a fresh area of worry.

At 8:11 a.m. ET, Nasdaq and S&P futures were lower, pointing to a weak open for Wall Street, which saw a four-day rally for blue chips end on Monday.

Boston Fed president Eric Rosengren and San Francisco Fed President Janet Yellen offered a bleak forecast for the housing sector and economy Monday, renewing jitters on Wall Street. Rosengren said early in the day he was worried foreclosures would worsen, while Yellen warned late in the afternoon about weak economic growth in the fourth quarter.

Economic weakness is likely to lead the central bank to keep cutting interest rates - which is usually a positive for stocks. Last week's rally was fueled by hopes for more Fed rate cuts.

But as the outlook for the economy becomes more dismal, skittish investors could turn away from risky assets like stocks and pile into safe havens such as Treasury bonds.

"Last week we had a Fed chairman who sounded more accommodative to cutting rates. So you celebrate that for a little while until the reality sets in that the fundamentals behind that aren't positive," said Art Hogan, chief market analyst at Jefferies & Co. "Often time it takes a little time to remember that bad news is bad news."

Drugmaker Merck (Charts, Fortune 500), a component of the Dow Jones industrial average, reaffirmed its earlier 2007 earnings per share guidance of $3.08 to $3.14, although that is below the current $3.15 a share consensus forecast of analysts surveyed by Thomson First Call. It also issued its initial guidance for 2008 EPS of between $3.28 to $3.38, which falls short of the First Call estimate of $3.39.

Shares of Merck fell 1.8 percent in premarket trading.

A Senate panel is set to hold a hearing Tuesday about practices in the credit card industry. The chairman of the panel, Sen. Carl Levin, D-Mich., has voiced support for legislation that would limit card issuers' ability to raise customers' interest rates if their credit scores declined. Officials of Discover (Charts), Bank of America (Charts, Fortune 500) and Capital One (Charts, Fortune 500) are due testify at Tuesday's hearing.

On the campaign trail Monday, Democratic presidential candidate Barack Obama also proposed restrictions on what he called "predatory" credit card companies, which he said deceive consumers into piling up massive debt they have little hope of repaying. He said soaring credit card debt could match the subprime mortgage market meltdown as a problem for the U.S. economy.

Hogan said talk about mounting credit card debt could be a drag on the markets, given the timing relative to the holiday shopping season.

"Everything we do reflects the concerns about the consumers, especially this time of year," he said.

Fannie Mae (Charts) could be the next major financial firm to report big losses due to the mortgage meltdown. The company could see writedowns top $5 billion, according to Fortune.

In other corporate news, online auction site eBay (Charts, Fortune 500) announced a partnership with Yahoo (Charts, Fortune 500) to help it return to Japan, a market it exited in 2002.

No. 1 cell phone maker Nokia (Charts) said Tuesday it expects the global market for mobile devices to grow 10 percent in 2008 to more than 1.2 billion. The company said its share will also increase and raised its target for its operating margin. But markets were disappointed in the forecasts and shares of Nokia slipped 3 percent in early trading in Helsinki.

In global trade, major markets in Asia finished the session mixed, with Japanese stocks ending lower. European stocks fell in midday trading.

Oil prices, which just a week ago appeared poised to cross the $100 a barrel threshold for the first time, continued to slide ahead of Wednesday's meeting of OPEC oil ministers and the weekly report on U.S. fuel stockpiles, also due Wednesday, although prices were well above earlier lows. A barrel of light sweet crude was off 33 cents to $88.98.