By JOE BEL BRUNO, AP Business Writer 18 minutes ago
NEW YORK - Wall Street appeared headed for another tough session Tuesday, as stock futures retreated on comments from Federal Reserve Chairman Ben Bernanke that housing remains a drag on the economy.
Bernanke's comments late Monday during a speech at the New York Economic Club revived concerns that a recovery from the summer's credit crisis might take longer than expected. Investors also remain concerned about third-quarter earnings and rising energy costs.
Stocks had their biggest retreat in more than five weeks Monday after a consortium of banks led by Citigroup Inc. set up a fund to help bail out the credit markets. The nation's largest financial institution also reported a 57 percent decline in profit earlier in the day.
Investors might get a broader glimpse about how tightening credit markets and subprime mortgage woes affected several big regional banks. KeyCorp said before the open that profit fell 33 percent because of credit market volatility; while Wells Fargo & Co. is among other banks still scheduled to report.
Also putting pressure on stocks was a warning from Sweden's Ericsson that third-quarter operating profit will plunge 36 percent and margins would shrink sharply. The handset maker blamed the weak results on lower demand for mobile network upgrades.
Dow Jones industrial average futures fell 51, or 0.33 percent, to 14,015. Standard & Poor's 500 index futures fell 6.20, or 0.40 percent, to 1,553.80. Nasdaq 100 index futures fell 11.75, or 0.54 percent, to 2,169.00.
Oil prices pushed further into record territory on fears Turkey will pursue Kurdish rebels into Iraq and disrupt oil supplies in the region. Despite expectations of higher inventories in the weekly U.S. supply report released on Wednesday, a barrel of light, sweet crude rose $1.32 to $87.45 in premarket trading on the New York Mercantile Exchange.
Investors will get some more economic data on Tuesday with the National Association of Home Builders/Wells Fargo housing market index for October scheduled to be released at 1 p.m. EDT. The report is expected to show a decline from September.
Bernanke said in his speech the deepening housing slump probably will be a "significant drag" on economic growth. However, he again pledged to "act as needed" to help financial markets that were sent reeling this summer.
However, he did say that inflation remains in check. That could be a key factor for policymakers when deciding to cut interest rates at its Oct. 30-31 meeting.
Besides housing stocks, investors will also be looking closely at the technology sector. Quarterly profit reports from Yahoo Inc., International Business Machines Corp., and Intel Corp. will be released Tuesday.
Biotechnology shares might also weaken after Genentech Inc. reported third-quarter results barely beat Wall Street estimates. Analysts believe competition and market saturation might slow future earnings growth.
Overseas, Japan's Nikkei stock average closed down 1.27 percent. Britain's FTSE 100 fell 0.42 percent, Germany's DAX index fell 0.36 percent, and France's CAC-40 fell 0.87 percent.