Wall Street appeared ready to retreat again Tuesday, as stock futures sank amid nervousness about the fate of Detroit's Big Three auto makers.
On Tuesday, executives of General Motors Corp., Ford Motor Co. and Chrysler LLC and the head of the United Auto Workers union will testify at a Senate Banking Committee hearing. The automakers, seeking $25 billion in government aid, have the backing of Democratic congressional leaders, but the Bush administration and Republican lawmakers are against the proposed bailout.
If there's one thing that Wall Street can't bear, it's uncertainty. Stocks have been trading erratically for several weeks as investors try to gauge the direction of the economy - which relies heavily on jobs. A collapse of the U.S. auto industry would mean widespread job losses.
On Monday, Wall Street finished sharply lower in a volatile session as Citigroup Inc. announced more job cuts, the latest sign of pressures in the job market and the ongoing tumult in the embattled financial sector. And on Tuesday, HSBC Holdings PLC, Europe's largest bank by market value, said to employees that it plans to cut 500 jobs in Asia.
Ahead of the market's open on Tuesday, Dow Jones industrial futures fell 118, or 1.43 percent, to 8,141. Standard & Poor's 500 index futures fell 13.60, or 1.60 percent, to 837.40, while Nasdaq 100 index futures fell 20.00, or 1.73 percent, to 1,138.50.
In addition to the automaker testimony, investors will be focusing on testimony by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson before the House Financial Services Committee on Tuesday. The two will be questioned about their decision to abandon the original strategy behind the $700 billion rescue package; last week, Paulson said the money will no longer be used to buy banks' toxic assets, and instead go toward buying stakes in the banks and other efforts.
Wall Street will also be parsing economic data Tuesday. The Labor Department releases its October reading on producer prices at 8:30 a.m. Eastern time; the National Association of Realtors releases third-quarter area home prices and sales at 10 a.m..; and the National Association of Home Builders issues its monthly outlook at 1 p.m.
In earnings data, Home Depot Inc. reported a 31 percent drop in third-quarter profit due to weak consumer spending at its established locations. The profit was better than analysts anticipated, however.
In other corporate news, Yahoo Inc. founder Jerry Yang late Monday announced that he was stepping down as chief executive of the Internet company. Many analysts believe the departure will accelerate an overhaul of Yahoo and lead to a sale to Microsoft.
Treasurys remained in high demand. The yield on the three-month T-bill, considered one of the safest assets around, edged up just slightly to 0.12 percent from 0.10 percent late Monday. Yields that low suggest that investors are willing to earn virtually nothing on their investments as long as their principal is preserved.
The yield on the benchmark 10-year Treasury note fell to 3.62 percent from 3.66 percent.
The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude fell 39 cents to $54.56 a barrel in premarket electronic trading on the New York Mercantile Exchange.
In Asian trading, Japan's Nikkei index fell 2.28 percent, and Hong Kong's Hang Seng Index fell 4.54 percent. In midday trading in Europe, Britain's FTSE 100 fell 1.59 percent, Germany's DAX index fell 1.89 percent, and France's CAC-40 fell 1.74 percent.
(Copyright 2008 by The Associated Press. All Rights Reserved.)