Stock index futures pointed to a weak open Friday with banks set to take a hammering on growing fears of nationalization for Citigroup and Bank of America.
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Shares of the two Wall Street giants both fell in pre-market action as traders and analysts speculated about a coming wave of government ownership in the financial sector. Citigroup was nearly 7 percent lower and Bank of America was nearly 6 percent lower ahead of the open.
This comes after as selloff Thursday that saw the Dow crash through its November low to settle at a six-year low.
Traders have been clamoring for details of the Obama administration's stimulus plans, which were expected to assuage market jitters. But when specific plans for the mortgage-rescue plan emerged, stocks sold off.
"This market sold off quite frankly because it did not like the plan period," Jack Bouroudjian, a principal at Brewer Investment Group, told CNBC.
And, while tech stocks had a harder selloff than financials yesterday, Bouroudjian said it all comes down to the banks.
"The banking sector is the heart blood of capitalism. Unless it gets healthy, the rest of the sectors are going to spin their wheels," he said.
Futures pared their losses somewhat after an inflation gauge came in as expected. Consumer prices rose 0.3 percentlast month, the first gain since July; core CPI, which excludes volatile food and energy costs, rose 0.2 percent.
Switzerland’s tax and banking laws came under sharp scrutiny as US authorities widened a probe into UBS by suing for details of 52,000 of its clients.
The Swiss bank agreed to large fines earlier in the week in an attempt to settle criminal charges. UBS shares fell 14 percent premarket.
Bank of America is also under legal scrutiny, as chairman and chief executive Kenneth Lewis was subpoenaed by New York Attorney General Andrew Cuomo last week. Cuomo is investigating whether the bank violated state law by withholding information from investors, a source familiar with the case told CNBC.