Futures Rally but Fear Remains; Citi Gains
U.S. stocks looked set for an end-of-week rally Friday with the Dow futures gaining about 200 points ahead of the open, but recent declines have left investors with little trust in upswings.
"At best we might see a day or two of further rebounds, but as we've seen in the past after a big rally it always comes off, it's always met with skepticism," Omer Bhatti, head sales trader at Worldspreads, told "Worldwide Exchange."
"People are being spooked out of positions instead of thinking rationally," he added.
All of the major indexes suffered massive selling in the previous session and closed at multi-year lows across the board. A lack of direction on the proposed auto bailout and TARP plan continued to add to investors' fear.
A proposed $25 billion emergency loan to the Big Three automakers hit the brakes on Thursday with Congress announcing plans to revisit the issue in December.
Yet the massive drop Thursday which saw bond prices post their biggest gains ever, triggered another round of speculation as to whether the market had found a bottom.
Such a bottom would be expected to trigger a violent rally.
"Add a gigantic short-covering rally and it could be a rally the likes that we've never seen before," Matt Zeman of LaSallle Futures told CNBC.
Despite the stalling of the bailout plan, shares of Ford and General Motors both were indicating about 4 percent higher in premarket trading.
Financial stocks were set to remain in focus following Citigroup's two-day stock battering. Senior officials at Citi told CNBC a strategic change was needed in the bank's direction, which could include raising fresh capital or a merger.
Citi shares closed at $4.71 on Thursday, having slumped over 26 percent during the session and losing 23 percent on Wednesday. Pre-market trading pointed to a more than 11 percent jump in Citi shares at the open.
People at risk of foreclosure will get a reprieve during the festive season as mortgage finance companies Fannie Mae and Freddie Mac have suspended foreclosure sales between Nov. 26 and Jan. 9.
In political news, President-elect Barack Obama is likely to nominate Hillary Rodham Clinton as secretary of state after Thanksgiving, CNBC's John Harwood confirmed Thursday.
Numerous Federal Reserve representatives will take to the stage with Richmond Fed President Jeffrey Lacker kicking things off at 8:15 am New York time in Bethesda, Md. Philadelphia Fed President Charles Plosser will speak at midday in Philadelphia and Chicago Fed President Charles Evans at 12:40 pm in Indianapolis.
In addition, Heinz will report earnings before the bell.