Futures Pull Back After Big Rally
US stock index futures pointed to a lower open for Wall Street Tuesday after Monday's rally, despite good news continuing from the banking sector.
Fears over the health of the world economy resurfaced and investors were looking to lock in some gains after the previous session's jump. Futures indicate a drop of about 1 percent across the major indexes, with the Nasdaq tech barometer under the most pressure.
Shares of Ford Motor slipped more than 5 percent in premarket trading as the automaker said it would institute a 3.75 percent price hike on all its models in the United Kingdowm.
Bank stocks, meanwhile, were poised to give back some of Monday's massive gains, with Citigroup and Bank of America both losing more than 3 percent premarket.
Battered insurer American International Group lost nearly 7 percent premarket as the company continues to come under fire and Congress contemplates dismantling AIG.
Asian stocks rallied but European shares were lower after a strong start to the day.
In the banking sector, Switzerland's second-largest bank, Credit Suisse, said it has had a strong start to 2009 and reiterated it was poised to benefit from a market upswing when this happened.
Deutsche Bank also expects it will return to profit this year if the global economy, financial markets and the regulatory environment develop as expected, according to the bank's Chief Executive Josef Ackermann.
But worries emerged over the effects of the Treasury's plan to clean up toxic assets from the banking sector, with Nobel Prize-winning economist Joseph Stiglitz saying it is unlikely to work as long as the economy remains weak and that it would "rob" the US taxpayers.
The government is using the taxpayer to guarantee against downside risk on the value of the toxic assets, while giving the potential profits to private investors, Stiglitz told Reuters.
In addition, the recession looks set to stretch well into next year, probably raising the need for another fiscal stimulus package at least as large as the first one, prominent economist Martin Feldstein said.
Also in the financial sector, nine of the 10 executives who received top bonuses from American International Group have agreed to return them, New York Attorney General Andrew Cuomo said, adding that he hopes to recoup $80 million of bonus payments, or about half of the $165 million paid by the giant insurer.
And in the latest twists in the case of jailed swindler Bernard Madoff, a court-appointed trustee has located more than $1 billion of his assets, his house in France could be seized and American prosecutors are cooperating with a British agency that investigates organized crime.
And Goldman Sachs is said to be in talks to sell some of its 4.9 percent stake in Industrial & Commercial Bank of China, according to the Wall Street Journal, in a move that could raise more than $1 billion, according to people close to the talks.