Wall Street braces for ugly day

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NEW YORK (CNNMoney.com) -- Stock futures sank early Friday after a huge loss at insurer AIG raised worries about the credit crunch and investors awaited another wave of economic reports.

Shortly before the start of trading, Nasdaq and S&P futures were significantly lower, indicating heavy losses at the start for Wall Street.

Stocks tanked Thursday as investors fretted about a U.S. recession.

Early Friday, bond insurer MBIA (MBI) said it expected to see more writedowns amid continued deterioration in credit markets.

A wave of economic data due out today will give investors another look at the state of the economy.

A report on January personal income and spending came in slightly better than expected at.The Commerce Department said spending by individuals rose 0.4%, above December's revised 0.3% rise. Economists surveyed by Briefing.com had forecast a 0.2% gain in the month.

After the market open comes the Chicago PMI, a measure of manufacturing purchases. The University of Michigan's revision of its consumer sentiment index is also slated for release.

Also, several Fed officials are expected to speak. Fed Governor Frederic Mishkin and Eric Rosengren, president of the Boston Fed, will speak in the morning. That will followed by comments from Atlanta Fed president Dennis Lockhart. William Poole of the St. Louis Fed is also due to give a speech.

Financial shares are likely to be pressured after AIG (AIG, Fortune 500) reported a massive $5.3 billion quarterly loss after the close Thursday. The credit crunch slammed the company, which took $11 billion in writedowns during the quarter.

In the tech sector, computer maker Dell (DELL, Fortune 500) reported weak quarterly results late Thursday. Dell shares fell 4% in after-hours trading.

Retailer Gap (GPS, Fortune 500) reported on Thursday a third consecutive year of slumping sales, but managed a 21% increase in fourth-quarter profit through cost-cutting.

Overseas markets tumbled as investors worried about the ongoing credit crisis. Japan stocks finished the session lower and European stocks fell in early trading.

Investors are also focused on surging oil prices and the weak dollar. Light, sweet crude for April delivery briefly exceeded $103 a barrel for the first time in electronic trading. The euro, meanwhile climbed to an all-time high of $1.5238 in early European trading.