Roger Biduk - "Before the Bell" - Futures Pointing to a Lower Open on Wall Street

Roger Biduk writes:

FUTURES POINTING TO A LOWER OPEN ON WALL STREET

U.S. stock futures pointed to a weaker start Friday after an unexpected drop in retail sales, with markets on edge over the fate of Lehman Brothers Holdings, the brokerage believed to be in its last hours of independence.

December-dated S&P 500 futures fell 7.6 points to 1,244.40 and Nasdaq 100 futures dropped 6.5 points to 1,775.25. Dow industrial futures fell 63 points.

U.S. stocks saw a manic Thursday, with steep early losses ending in a sizeable advance as speculation that Lehman Brothers wouldn't survive was countered by talk that the investment bank is in talks for a federal government-chaperoned buyout. The Dow Jones Industrial Average rose 164 points, the S&P 500 added 17 points and the Nasdaq Composite rose 29 points.

U.S. retail sales unexpected fell in August, pushed lower by plunging gasoline prices, according to Commerce Department data released Friday. Seasonally adjusted retail sales fell 0.3% in August, much worse than the 0.4% gain expected by economists. Sales in June and July were also revised lower by a total of 0.6 percentage points.

Also, U.S. producer prices fell a steeper than expected 0.9% in August, the Labor Department reported Friday, helped by lower energy costs. The decline follows on the heels of a sharp 1.2% gain in July. Excluding food and energy, "core" producer prices rose 0.2% last month.

University of Michigan consumer sentiment data for September is due out shortly after the open of trade.
The US$ still rose against the British pound and the euro with currency market attention more on Lehman Brothers. Oil futures added 64 cents to $101.51 a barrel.

Attention on Friday turns to which firm is likely to end up with Lehman (LEH)
assets. Bank of America (BAC) was Lehman's "best hope," according to an article in The Wall Street Journal. Britain's Barclays (BCS), which like Lehman is active in debt-market financing, has also been named as a possible suitor.

In pre-open deals, Lehman shares dropped 12.8%.

Merrill Lynch (MER) fell 16% on Thursday on fears that it will be the next domino to fall. Merrill shares lost a further 6% in pre-market trade.

Meanwhile, Washington Mutual (WM) late on Thursday gave a financial update, saying it's well capitalized and that provision for loan losses will drop to roughly $4.5 billion from $5.9 in the second quarter. Retail deposits were "essentially unchanged" at the end of August from year-earlier levels.

Goldman Sachs upgraded Washington Mutual to neutral from sell, saying the lender's capital is absorbing pain, but Moody's Investors Service cut its credit rating to below investment grade.

Chipotle Mexican Grill (CMG) shares lost 12% on a warning over third-quarter earnings, which it now expects to fall.

Overseas markets were generally stronger, with the FTSE 100 up 0.9% in London and the Nikkei 225 up 0.9% in Tokyo.

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