Futures Flat, Bailout Worries Persist
U.S. stock index futures were broadly flat ahead of the open Tuesday as investors grew nervous that the government's plan to bail out the troubled financial sector might be delayed by political bickering.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke begin an intensive two-day round of congressional hearings later on Tuesday to hasten approval of the bailout legislation.
CNBC.com will provide live streaming of the hearings beginning at 9:30 am ET.
A lot is riding on how well the two officials can soothe fears that the measures being taken will be enough to stem the financial market collapse.
"Bernanke needs to get the Academy Award," Art Cashin, director of floor operations at UBS, said on CNBC. "He has to keep Congress' feet to the fire by talking very somber yet do it without frightening and inflaming markets that are very volatile now."
Futures were slightly above fair market value shortly before the market open.
Details of the $700 billion bill have started to filter through to investors, but a full picture of how the markets and economy will be affected may not be apparent until next week. In the mean time stocks are subject to further volatility as uncertainty rules.
"It's a market that's clearly exceptionally nervous. It's a market that can't make its mind up as to whether the biggest bailout in financial history is good for us or bad for us," Angus Campbell, head of sales from Capital Spreads, told "Worldwide Exchange."
The price of oil reflected the uncertainty and spiked nearly $7 late on Monday to notch up a historic one-day surge, but prices quickly eased to below $108 as investors took profits. The dollar took a hit from the government plan, suffering its steepest decline against the euro since January 2001.
Meanwhile, investors got a reminder of the flagging state of the economy as the National Retail Federation forecast holiday sales are to grow at the slowest pace in six years. Consumers are put off from spending by worries over job security, falling house prices and rising inflation.
There was some good news for former Lehman Brothers staff, however, as UK bank Barclaysreopened a series of the collapsed investment bank's former businesses. Lehman's sales and trading businesses are not yet open.
At the same time, the decision by Morgan Stanley and Goldman Sachs to become holding banks rather than investment banks continued to raise concerns among investors. Shares of both companies slipped before the market open.
In earnings, home builder Lennar shares edged higher premarket after the company reported a loss less than expected.
In corporate news, chemical maker DuPont said CEO Charles O. Holliday Jr. will be replaced in January by Ellen J. Kullma, pushing shares slightly higher premarket.
And shares of electronics retailer Circuit City gained more than 5 percent after its CEO resigned amid a fierce proxy battle, part of the company's turns to reverse its ailing fortunes.