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Futures Flat as Bailout Rally Loses Steam

Stock index futures pointed to a flat open for Wall Street as enthusiasm waned over the bailout of Fannie Mae and Freddie Mac and worries about the economy returned to the markets.

The housing market will have to stabilize, banks need to get healthy, and the consumer has to escape the headwinds of surging unemployment and still-high energy prices before anyone is willing to pronounce a full recovery, investors said.

Shares of homebuilders also were set to surrender some gains from Monday's rally after Credit Suisse downgraded a group of industry leaders on concerns that prices will continue to fall and credit standards will remain tight. Toll Brothers shares fell more than 2 percent while KB Home fell 3 percent premarket.

At the same time, Apple shares gained nearly 1 percent in premarket trading as the company prepares a new product rollout, widely believed to be the debut of new new iPods.

Dow component Hewlett Packard also was among the early gainers, with shares picking up 2 percent premarket after Bernstein upgraded it following HP's acquisition of Electronic Data Systems.

The price of oil remained depressed as OPEC powerhouse Saudi Arabia suggested that a meeting of oil ministers of the 13-nation organization will decide to keep crude production steady, despite their worries over rapidly falling prices.

In the financial sector, Citigroup isselling 315 billion yen ($2.93 billion) in three-year Samurai bonds to Japanese retail investors, lead manager Nikko Citigroup said. The deal will be the largest Samurai bond issue ever. Citi shares edged higher in premarket trading.

At the same time, common shares for Fannie climbed 16 percent and Freddie gained more than 6 percent.

On the economic front, a measure of U.S. employment expectations fell to its lowest level since 2003, amid signs the job market slowdown is spreading to economies around the globe, a quarterly survey by Manpower showed.

Pending home sales data are due at 10 am New York time and are expected to have fallen by 1.4 percent in July compared with a 5.3 percent rise in June. At the same time, wholesale inventories data will be released and are expected to have risen by 0.7 percent in July versus 1.1 percent in June.

And discount retailer 99 Cents Only Stores announced the first price increase in its 26-year history, blaming inflation and rising food and energy prices for its new 99.99-cent prices. Shares fell more than 1 percent premarket.

Asian stocks ended lower on growth worries while European markets started the day in the red but turned into the green in mid-morning.