Stocks set to fall amid jitters
Worries about mortgage finance giants Fannie Mae and Freddie Mac pressure futures. Oil jumps above $117 a barrel.
NEW YORK (CNNMoney.com) -- Stock futures tumbled early Thursday, weighed by higher oil prices and lingering concerns about the financial sector.
About two hours before the start of trading, Nasdaq and S&P futures were lower and suggesting a negative open for Wall Street.
Stocks managed to finish higher Wednesday after another drop in oil prices helped deflect attention away from financial sector woes.
Mortgage giants: But fears that mortgage finance giants Fannie Mae and Freddie Mac are on the brink of a government takeover continue to stalk investors.
Fannie (FNM, Fortune 500) shares sank almost 27% and Freddie (FRE, Fortune 500) shares tumbled 22% in Wednesday trading. More than 200 million shares of both Fannie and Freddie changed hands, four times their average trading volume. So far this week, the stock for each of the mortgage giants has plunged 44%.
Wall Street is concerned about Fannie and Freddie's need to raise capital and the possibility of a government bailout. Estimates for the cost of a bailout range from $25 billion to $100 billion.
Fannie CEO Daniel Mudd tried to calm concerns about a bailout on Wednesday, when he told National Public Radio: "They haven't offered anything and we haven't asked for anything. I don't anticipate they will do that."
Earlier this week, Freddie paid a steep borrowing premium when it issued $3 billion worth of five-year debt.
Oil: Higher crude prices could also pressure stocks. U.S. crude for October delivery climbed $1.70 to $117.26 a barrel in electronic delivery. The September contract expired Wednesday.
Crude futures rose as traders continued to digest a U.S. inventory report released Wednesday. The report showed a build up in crude supplies but showed a bigger-than-expected decline in gas stockpiles.
Economy: The U.S. Labor Department is due to release its weekly jobless claims report. The Philadelphia Federal Index, a survey of regional manufacturing activity, also is on tap.
IAC: Barry Diller's IAC/InterActiveCorp. (IACI, Fortune 500) is set to complete its split into five publicly traded companies Thursday. As a result, HSN Inc., Interval Leisure Group Inc., Ticketmaster and Tree.com Inc. will make their trading debut as independent companies.
Lehman: Fannie and Freddie aren't the only financial firms trying to raise money. Battered investment bank Lehman Brothers (LEH, Fortune 500) held secret talks with South Korean and Chinese investors to try and sell up to half of its shares, according to the Financial Times, but failed to reach an agreement with either.
Earnings: Hamburger chain Burger King (BKC) and bookseller Barnes and Noble (BKS, Fortune 500) are both set to report quarterly results before the opening bell. Retailer Gap (GPS, Fortune 500) posts earnings after the market close.
Other markets: Stocks in Asia ended lower. European markets also pulled back in morning trading.
In currency trading, the dollar slipped against the euro and tumbled versus the yen. 
-
All credit cards are not created equal. From 7.2% to cash back, 6 great deals. More -
With the stimulus underway and unemployment rising, economic leaders weigh in. More -
Thanks to sinking home prices, these 5 homebuyers were able to score deals in prime areas. More -
A new top-of-the-line luxury sedan -- the finishing touch on a troubled brand's make-over. More -
Nissan, GM and Ford are placing their bets in the high-stakes game of electric driving. More -
Not even ultra-dapper President Obama could help Hartmarx, the Chicago-
based clothing maker. More
