Futures Hurt by Poor Manufacturing Picture

U.S. stock index futures were indicating an uncertain number amid a dismal manufacturing report and as contradictory information on a bailout package for troubled automakers were making investors nervous.

After the Senate rejected a plan to grant the Big Three $14 billion, the White House indicated Friday that it may use the Troubled Assets Relief Program to help the automakers.

But President Bush said Monday an announcement on the auto industry rescue was not imminent, bringing back the cloud of uncertainty.

"We're not quite ready to announce that yet," Bush told reporters on Air Force One during a flight from Baghdad on an unannounced visit to Afghanistan.

Investors, though, maintained a level of optimism and sent General Motors shares up more than 6 percent and Ford up about 3 percent in premarket trading.

Index futures were below par but still above fair market value, indicating an uncertain start for the market.

Futures moved lower following release of the latest Empire State Manufacturing Index number, which at -25.3 was its lowest on record.

Elsewhere, Honeywell shares gained 5 percent premarket after the manufacturer affirmed a lower 2009 outlook. The company said it expects profits to fall 6 to 16 percent amid the economic slowdown.

Bank of America shares rose nearly 2 percent after it doused speculation that it was going to dump its stake in China Construction Bank.

And Huntsman shares tumbled 30 percent after the company said it terminated a potential takeover by Apollo Management's Hexion Specialty Chemicals.

Another issue facing investors this week is the Federal Reserve's decision on interest rates which will be announced Tuesday.

Some analysts say the Fed will not cut rates more than a quarter of a percentage point, to keep some ammunition dry, while others are already looking beyond the decision to alternative monetary policy tools.

However, the was buzz Monday that the Fed might drop the rate by 75 basis points, or three-quarters of a percentage point, to 0.25 percent.

Experts are predicting that the dollar's rally may have ended and that the yen's appreciation will only start slowing next year.

As the scandal of one of the biggest pyramid schemes in history continues to unfold, Fairfield Greenwich, one of the big feeder funds, is planning a lawsuit against Bernard Madoff, the New York money manager accused of running what prosecutors say was a $50 billion Ponzi scheme, CNBC has learned.

The list of institutions and individuals with exposure to Madoff's fund is growing, with three of Europe's biggest banks revealing their positions.

In the real estate sector, a revival should begin by next spring, property mogul Sam Zell told an Israeli business conference on Sunday.

Zell, who is the owner of Tribune, publisher of the Chicago Tribune and the Los Angeles Times, which filed for Chapter 11 bankruptcy protection last week, declined to comment on his plans to sell the Chicago Cubs baseball team and its Wrigley Field stadium.

Also in the housing sector, government-controlled Fannie Mae will allow tenants to remain in their homes and avoid eviction even if the building's landlord goes into foreclosure, The Wall Street Journal reported on Sunday.

Fannie Mae previously had said it would not evict tenants during the year-end holiday season.

On the economic front, industrial production data will be released at 9:15 am New York time and the indicator is expected to have fallen by 0.5 percent in November from October's 1.3 percent rise, according to Briefing.com.