By Ellis Mnyandu
NEW YORK (Reuters) - Stock index futures were little changed on Thursday as a profit warning from General Electric
Investors are betting that the approval of the bailout, set to be one of the costliest since the Great Depression, will help facilitate lending and revive business and consumer spending, key drivers of corporate profits.
President George W. Bush, in a nationally televised speech on Wednesday, urged action on the bailout, saying the United States was in a serious financial crisis.
But GE's profit warning looked set to fuel caution, along with the latest signs of strains in interbank lending.
"This is part of the confession season. Obviously this announcement (from GE) will restrain the markets a bit, but I think the big story remains the rescue plan, which will obviously be approved very shortly," said Peter Cardillo, chief market economist at Avalon Partners in New York.
S&P 500 futures fell 1.80 points but were above 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 rose 6 points and Nasdaq 100 added 7.75 points.
Congressional Democrats and Republicans plan to meet on Thursday to draft a final bipartisan plan, a Democratic source told Reuters on Wednesday night.
GE, whose shares dropped more than 5 percent before the bell, blamed turmoil in the financial services markets for its reduced outlook.
In his speech, Bush warned of a looming economic disaster if Congress failed to act swiftly to fund the $700 billion bailout that would be larger than the total cost of the Iraq war.
In another worrying sign for investors, the interbank cost of borrowing three-month money in London again jumped on Thursday, indicating that lending between banks remains strained because of a lack of confidence.
(Editing by Kenneth Barry)
