Economic fears and Citi to weigh on Wall Street
NEW YORK (Reuters) - Stocks were set to slip on Tuesday as mounting fallout from the worldwide economic slump fueled a global sell-off in equities and investors worried about the outlook for Citigroup .
Hopes Washington would work speedily on a plea by U.S. President-elect Barack Obama for remaining financial rescue funds to stabilize credit markets provided some support.
Additionally, investors drew comfort from comments by Federal Reserve Chairman Ben Bernanke that the government could consider buying troubled assets.
That step had been originally envisaged for the $700 billion financial bailout last year so that banks could be relieved of bad mortgage debts.
"Bernanke talking about buying toxic assets, which is what the (financial bailout) was initially intended for, is maybe giving some hopes, but banks remain under some pressure," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York. "Crude has also gone back to flat, which also helps."
S&P 500 futures shed 4.10 points, and were slightly 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 26 points while Nasdaq 100 futures slipped 4.50 points.
A day after Alcoa Inc kicked off what investors fear will be a bleak fourth-quarter earnings reporting season, Wall Street looked set to put a further dent in gains recorded since the market's November 21 bear market low.
Stocks likely to weigh on the market include Citigroup as investors fret about the possibility of more credit losses and uncertainty over the outlook as the embattled bank pushes to sell a controlling stake in its Smith Barney retail brokerage unit, a crown jewel.
Shares of Citigroup, a Dow component, fell more than 5 percent to $5.22 before the bell.
Obama, who is due to be sworn in on January 20, is pushing for Congress to release the remaining $350 billion of the $700 billion financial industry bailout.
Obama wants the aid to go to consumers threatened by home mortgage foreclosures and plans to meet on Tuesday with Senate Democrats to seek backing for his request for the funds.
(Editing by James Dalgleish)