US stocks-Futures fall on credit worries, Blackstone eyed
US stock futures fell on Friday, as lingering credit worries looked set to drag on financial stocks.business Updated: Jun 22, 2007 18:22 IST
US stock futures fell on Friday, as lingering credit worries looked set to drag on financial stocks, and with investors cautious ahead of a Federal Reserve interest rate decision next week.
But a good debut by Blackstone could turn momentum around. Blackstone Group LP, the largest private equity firm to go public, raised $4.13 billion in an initial public offering on Thursday despite growing political pressure from Congress.
Lawmakers have raised concerns about the favorable tax treatment such companies get.
Financial stocks have been in the spotlight this week, after Wall Street banks unwound positions in two Bear Stearns Cos hedge funds heavily invested in subprime mortgages, the riskiest US home loans, raising concerns about a wider fallout.
Bear Stearns, trying to prevent the collapse of the two hedge funds, may take over about $3.2 billion of the funds' loans to prevent creditors from seizing more assets, Bloomberg reported on its website on Friday. Bear Stearns' shares were down 0.4 per cent in Europe.
"There is continued concern about fallout from subprime. Investors are worried other companies could be in the same predicament," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
"Blackstone is going to be important, because it is coming at a time when investors are becoming concerned about the issues surrounding financial companies. We need to see that IPO trading well today," Mendelsohn said.
S&P 500 futures were down 3.80 points, 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 were down 25 points, while Nasdaq 100 futures were down 3.75 points.
Shares of contract electronics manufacturer Jabil Circuit Inc, rose 13.6 per cent in Europe, after the company posted strong earnings after the closing bell on Thursday. On Friday, Credit Suisse upgraded Jabil Circuit to outperform to neutral, according to theflyonthewall.com.
US retailer Abercrombie & Fitch's stock fell 1.63 per cent in Europe after Lehman Brothers cut is rating to "equal weight" from "overweight" according to theflyonthewall.com.
The US Federal Reserve is due to announce its interest rate decision next Thursday, and all eyes will be on the bank in an environment where rising rates are seen as the top threat to a four-year equities bull run.
A Reuters poll earlier this month showed that economists expect the Fed to keep rates at 5.25 per cent through 2008, a sharp change from a month earlier when they forecast a cut later this year.
US stocks finished a volatile session higher on Thursday after brokerage upgrades sent the semiconductor sector to a 13-month high and fresh data pointed to a growing economy.