Stocks set to slide on autos and jobless data

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By Ellis Mnyandu

NEW YORK (Reuters) - Stocks were set to slide at the open on Thursday as investors worried that failure by U.S. automakers to get a government bailout would add to the economy's woes, fears that were heightened by news of further labor market deterioration.

A government report showed that the number of U.S. workers filing new claims for jobless benefits rose to their highest level in 16 years.

Investors also fretted about the future of Citigroup Inc as the bank's stock keeps plunging from fallout from the mortgage crisis.

A day after Citigroup shares slid to a 13-year low, Saudi Prince Alwaleed bin Talal said he would boost his stake in Citigroup to 5 percent. The news initially sent Citi shares up as much as 6 percent, but heading into the open the gains had evaporated.

"One of the major problems here is what's going to be the effect on the economy if the automakers are not bailed out," said Peter Cardillo, chief market economist at Avalon Partners in New York. "Unfortunately, even some of the good news that's out there is not able to reverse negative market sentiment."

S&P 500 futures fell 18.9 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures declined 156 points, and Nasdaq 100 dropped 22 points.

The magnitude of the drop in stock index futures suggested that the market's benchmark indexes would open 2 percent or more lower, and the Dow industrial average could fall below its bear-market intraday low set October 10, a technical breach which the Nasdaq and the S&P 500 have already done.

As a sign of weakening global growth, oil extended its fall on expectations of falling demand. U.S. crude futures were down $3.63 at $49.99 a barrel for the first time below $50 since January 18, 2007.

With Congress winding down its session, the auto makers appeared to have made very little progress in convincing Washington to agree to a $25 billion rescue package that the automakers say is necessary to avert bankruptcy.

Even after two days of pleas for aid by auto executives on Capitol Hill, the fate of General Motors , Ford and Chrysler hangs on the balance.

The automotive executives on Wednesday predicted a far-reaching calamity for the U.S. economy without a government lifeline. Before the bell shares of General Motors, a Dow component, slid more than 10 percent to $2.50.

Worry about the fate of the U.S. auto industry, a major employer, was one of the catalysts for Wednesday's stock market plunge to a 5-1/2 year low, along with fears of more losses for the financial sector.

(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)

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