Lower open seen on credit, economic worry
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By Ellis MnyanduNEW YORK (Reuters) - Stocks were set to drop at the open on Tuesday as government data showed underlying inflation is picking up speed and investors worried that the credit crisis was far from over.Wall Street was likely to extend declines seen in Asia and in Europe.Fanning gloom about the financial sector was a forecast by JPMorgan Securities that Lehman Brothers , a U.S. investment bank, will likely take a further $4 billion of write-downs in the third-quarter due to losses stemming from sour mortgage-related investments.Lehman shares were down 2.2 percent at $14.70 before the bell. Additionally, worries about the stability of home finance providers Fannie Mae and Freddie Mac persisted.U.S. wholesale prices shot up at the fastest annual rate in 27 years, while core producer prices, excluding volatile food and energy, notched their fastest rise since November 2006.The PPI data supported those arguing that the U.S. economy is dogged by mounting inflationary pressures even as growth slows due to the housing downturn. July's Consumer Price Indexlast week rose at the fastest pace in 17 years."This really confirms what the CPI showed last week, that inflation is running high," said Ryan Detrick, technical analyst at Schaeffer's Investment Research in Cincinnati, Ohio."The hope with the PPI was that maybe it was going to come down a little bit, given the lower energy prices, but this higher-than-expected number confirms that inflation is going to continue to be a concern for the Fed going forward."S&P 500 futures fell 11.30 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 99 points and Nasdaq 100 futures slid 14.5 points.(Additional reporting by Kristina Cooke; Editing by Kenneth Barry)
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