Stocks point to mixed open as oil declines

August 12, 2008 5:48:23 AM PDT
Stocks headed for a narrowly mixed open Tuesday as investors juggled unease about the financial sector with enthusiasm over another drop in oil prices.Wall Street's latest reminder that troubles remain in the financial sector came when JPMorgan Chase & Co. said late Monday it has incurred wider losses in its mortgage holdings so far in the third quarter than in the second quarter.

The company's disclosure in a regulatory filing that it has lost $1.5 billion, after hedges, in its mortgage-backed securities and loans this quarter offered fresh signs of the scope of the troubles in the credit markets. In the second quarter, the company's losses tied to souring mortgage debt totaled $1.1 billion.

Still, some investors likely saw the losses as relatively small compared with the more than $300 billion that financial institutions have written down over all in the past year.

Adding to jitters about financials, UBS AG said Tuesday it had further losses and write-downs of $5.1 billion during the second quarter of 2008.

Yet investors received welcome news as oil continued its retreat, falling to a 3-month low Tuesday as a stronger dollar and weakening crude demand from China weighed on investor sentiment.

Light, sweet crude fell $1.34 to $113.11 a barrel. Oil has fallen more than $30 from its July 11 high of $147.27, easing concerns about inflation.

Dow Jones industrial average futures fell 11, or 0.10 percent, to 11,757. Standard & Poor's 500 index futures rose 0.90, or 0.07 percent, to 1,306.00. Nasdaq 100 index advanced 7.00, or 0.36 percent, to 1,950.00.

Bonds were little changed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 4.00 percent from late Monday.

The dollar was higher against most other major currencies, while gold prices fell.

Beyond the moves of commodity prices, investors are awaiting a Commerce Department report on the nation's trade deficit for June.

While it had been narrowing, economists expect the trade deficit to jump in June because of the country's rising bill for foreign oil.

Crude didn't begin its decline until mid-July.

The deficit for June is expected to climb to $61.5 billion, according to the consensus forecast of Wall Street economists surveyed by Thomson/IFR. In May, the deficit shrank to $59.8 billion as a weaker dollar helped to boost U.S. exports to a new high.

Overseas, Japan's Nikkei stock average fell 0.95 percent. In afternoon trading, Britain's FTSE 100 rose 0.19 percent, Germany's DAX index fell 0.14 percent and France's CAC-40 rose 0.25 percent.