Stocks headed for another decline

By CNNMoney.com staff


NEWYORK(CNNMoney.com) -- U.S. stocks were headed for a lower open Friday after a dismal report from AIG dashed hopes for an opening advance. A stronger than originally reported GDP report failed to boost sentiment.

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

Wall Street ended Thursday's session lower, amid worries about the debt crisis in Greece and weaker-than-expected economic reports. But sentiment improved in the final hour of trading and stocks pared losses.

Some of the positive sentiment carried over in pre-market trading on Friday, before AIG knocked the wind out of investor confidence.

AIG (AIG, Fortune 500) reported a worse-than-expected $9 billion loss Friday, partly from the sale of certain divisions of the company to pay off its government debt. This followed two positive quarters. The stock declined in pre-market trading.

Before AIG came out, Peter Cardillo, chief market economist for Avalon Partners, said investors were focusing on positive signs from Greece and India, with leaders in those countries making reassuring statements regarding their national economies.

"The Greek prime minister once again reiterated the need to get their house in order and he's confident that they will not need to be bailed out," he said.

Optimistic forward-looking comments from the Indian finance minister were sparking a rally in emerging markets, he added.

Economy: The government released a revision of fourth-quarter gross domestic product, which was slightly higher than expected, with an annual rate of 5.9%.

But this failed to inspire investors. Futures had recovered somewhat from the AIG-related fallout, but slipped again after the GDP report.

A consensus of economists surveyed by Briefing.com had expected growth at an annual rate of 5.7%, unchanged from the first reading last month. This is compared to an increase of 2.2% in the third quarter.

After the opening bell, the Chicago purchasing managers' index is expected to slip to 59.7 for February, down from 61.5 the prior month but still indicating expansion in the region's manufacturing sector.

The National Association of Realtors is expected to announce that existing home sales, probably the most important report for Friday, is expected to come in at an annual rate of 5.5 million units for January, according to the Briefing.com consensus. This would be up slightly from 5.45 million the prior month..

World markets: Major European indexes gained in midday trading. Britain's FTSE 100 and France's CAC 40 both rose 0.9% while the DAX in Germany added 0.8%.

Investors in Asia also were upbeat, pushing the Hang Seng in Hong Kong 1% higher. Japan's Nikkei ended the day up 0.2%.

Cash and bonds: The dollar slipped against the euro and the yen, but rose versus the pound. The price of the 10-year note declined, pushing up the yield to 3.63%.

Gold and oil: The price of gold slipped 30 cents per ounce $1,108.20. The price of oil slipped 6 cents per barrel to $78.11. To top of page

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