Stocks poised for early drop

NEW YORK (CNNMoney.com) -- U.S. stock futures fell Friday, as the Federal Reserve's decision to raise its emergency funding rate triggered worries about tighter credit.

Dow Jones industrial average, S&P 500 futures and Nasdaq 100 futureswere lower.

Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

"The Dow futures collapsed," after the Fed hiked its emergency rate, said David Jones, chief market strategist at IG Markets in London."They dropped 70 points in five minutes. So it's really fallout from that."

The rate, known as the discount rate, is what the Fed charges banks that borrow from the central bank when they run short of funds.

The Fed decision is perceived as a harbinger of things to come, said Jones.

"The Fed doing this sort of thing is traditionally seen as the first warning sign that they are planning on tightening up their fiscal policy and the period of them supporting markets has come to an end," he said.

Having said that, U.S. stock futures have partly recovered from yesterday's lows, and Jones said there's still a chance that the decline in the stock market will be moderate.

"It wouldn't be surprising if we saw the markets claw a lot of that back because stock markets have been resilient in recent weeks," said Jones.

Besides, he added that he doesn't expect the Fed to raise the key federal funds rate until the third quarter. That figure has remained near zero for more than a year. The central bank said Thursday that it didn't expect its move on the discount rate to lead to tighter credit for households and companies.

Wall Street has largely been in rebound-mode this week. U.S. stocks rose for a third straight session Thursday, led by gains in bank and tech shares, fueled by the morning's manufacturing report. The weaker dollar gave a lift to commodities and select blue chips.

World markets: Around the globe, investors were worried that the Fed's move was a sign that the central bank is closer to unwinding the emergency measures it put in place in the wake of the financial crisis.

Major European indexes fell in midday trading. In Asia, Japan's Nikkei retreated 2%.

Economy: Futures showed little reaction to a reading on inflation, which rose less than expected.

The Consumer Price Index rose by 0.2% in January, according to the Bureau of Labor Statistics.

Economists surveyed by Briefing.com had expected an increase of 0.3% for January.

Earnings: Dell (DELL, Fortune 500) reported lower earnings that topped Wall Street's estimates late Thursday. But the company's shares fell in after-hours trading as investors expressed concerns about lower margins.

Cash and bonds: The dollar was mixed versus international currencies, slipping against the euro and the yen but rising against the pound. The price fell on the 10-year note, pushing down the yield to 3.78%.

Gold and oil: The price of gold plunged $9 per ounce to $1,109. The price of oil fell 28 cents to $78.78 per barrel.