Stocks set for rough open

NEW YORK (CNNMoney.com) -- U.S. stocks looked set for a tough start Friday as credit and recession concerns hung over the market ahead of a key government reading on inflation.

At 6:41 a.m. ET, Nasdaq and S&P futures were lower, pointing to a negative start for stocks.

Citigroup said late Thursday it would rescue seven affiliated investment vehicles that have been hit hard by the credit crisis.

The move fanned credit worries as investors worried that Citi (C, Fortune 500) would come under more pressure as it moves the funds' $49 billion of assets onto its balance sheet. After the news, credit rating agency Moody's downgraded Citigroup's long-term credit rating as well as its financial strength rating.

Still, shares of Dow component Citi gained nearly 3 percent in Frankfurt trading early Friday.

In global trade, Asian stock markets tumbled. European stocks, meanwhile, rebounded from the previous session's big plunge.

Oil prices climbed back near the $93 a barrel mark, with a barrel of light sweet crude gaining 67 cents to $92.92 in early trading.

On the economic front, former Federal Reserve Chairman Alan Greenspan warned in an interview to be broadcast Friday on National Public Radio that the odds the U.S. will fall into a recession are "clearly rising" and he believes economic growth is "getting close to stall speed."

Concerns about rising inflation risk could tie the hands of the Fed on future rate cuts meant to spur growth and avoid a recession.

The government's Producer Price Index, released on Thursday, showed the biggest jump in energy prices on record and the largest jump in overall prices in 34 years. That report dented U.S. stocks and bond prices, but stocks rallied to end the session mostly in positive territory.

On Friday investors will get a look at the government's key inflation measure, the Consumer Price Index, which tracks prices at the retail level. The November report is due at 8:30 a.m. ET.

Economists surveyed by Briefing.com forecast that overall prices jumped 0.6 percent, twice the gain in October. The more closely watched core CPI, which strips out volatile food and energy prices, is seen posting the same 0.2 percent gain as it did the previous month.

Other economic reports due Friday include a reading from the Fed just before the market open on industrial production and capacity utilization. Production is forecast to be up 0.2 percent after a 0.5 percent drop in October, while factories are seen operating at 81.7 percent of capacity, unchanged from the previous report.

In corporate news, airline stocks could get a lift Friday from news that JetBlue (JBLU) would receive $300 million from German airline Lufthansa for a 19 percent stake in low-cost carrier. JetBlue will issue additional shares for Lufthansa's stake. But even with that dilution, shares of JetBlue gained 1 percent in after-hours trading Thursday, as did the shares of most U.S. airlines. Lufthansa shares fell 1.3 percent in Frankfurt trading, though.

Drugmaker Merck (MRK, Fortune 500) encountered a setback on Thursday, when a FDA panel shot down its bid for over-the-counter sales of its cholesterol drug Mevacor. Shares of the Dow component lost 0.6 percent in after-hours trading on the news.

Palm (PALM), which has seen weak sales of the Treo smart phones, laid off about 10 percent of its work force this week to cut expenses, according to published reports. The company issued a statement late Thursday confirming some layoffs.

Telecom Qwest (Q, Fortune 500) saw shares jump nearly 7 percent in after-hours trading Thursday after it announced it will begin paying a dividend, the first time it has done so since 2001.

Top executives of Fannie Mae (FNM) will face shareholders on Friday at its annual meeting, which is bound to cast more light on problems in the mortgage finance market.