Stocks' outlook clouded by Fannie
Bigger-than-expected loss by mortgage giant erases early future gains. Oil prices drop as U.S. dollar strengthens.
NEW YORK (CNNMoney.com) -- Stocks pointed to a sluggish open Friday as a steep loss from the troubled mortgage financier Fannie Mae rattled investors, even as oil prices extended their decline and the U.S. dollar gained strength.
An hour before the open, Nasdaq and S&P futures were mixed after pointing higher earlier in the morning. Stocks finished sharply lower Thursday after some signs of economic weakness, including disappointing retail sales and a surge in consumer credit.
Fannie Mae The funder of mortgages reported a much wider-than-expected loss of $2.3 billion, or or $2.54 a share amid the continuing credit crunch. Analysts surveyed by Thomson Reuters forecast a loss of 68 cents a share.
The news sent Fannie (FNM, Fortune 500) shares down 12% in pre-market trading.
Fannie's results came two days after its fellow government-sponsored enterprise, Freddie Mac (FRE, Fortune 500), posted a $821 million loss, slashed its dividend 80% and warned of further problems in the housing and credit markets.
Oil Crude futures fell $2.02 to near $118 a barrel in Friday electronic trading on a stronger dollar, which outweighed concerns over the recent sabotage of Turkish pipelines.
And average retail gasoline prices fell yet again overnight, declining by more than a penny to $3.836 a gallon from $3.849, according to an AAA survey of gas station credit card swipes revealed Friday. The decline marks the 22nd consecutive day that gas prices have moved lower.
Prices are now down nearly 7% from the record high of $4.114 that gas prices hit on July 16.
Merrill Lynch The brokerage said late Thursday it will buy back $12 billion worth of auction-rate securities from 30,000 customers. Merrill (MER, Fortune 500)'s action came after Citigroup (C, Fortune 500) announced a settlement with New York State to reimburse holders of $7 billion in the securities. Merrill shares fell 0.3% in premarket trading
Productivity The government said second-quarter productivity rose 2.2% from the first quarter, less than the 2.5% increase expected in an economists' survey by Briefing.com.
Results A handful of companies delivered quarterly results before the opening bell including the homebuilder Beazer Homes USA (BZH) which reported a narrower loss. Still, the loss was much bigger than analysts were anticipating.
And the troubled bond insurer MBIA (MBI) booked a surprising second-quarter profit of $1.7 billion on Friday, helped by a pretax gain that was the result of a downgrade by the rating agencies Moody's and Standard & Poor's.
Overseas The dollar rallied in Friday trading against the 15-nation euro after the European Central Bank offered a somewhat gloomy outlook on European economic growth. The dollar also headed higher against the yen.
Asian markets ended mixed Friday; Tokyo's Nikkei index was up 0.3% but shares in China and Hong Kong fell as the opening of the Beijing Olympics neared. European stocks were mixed in late morning trading. 
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