Stocks point higher after steep sell-off

Wall Street found some relief Friday from a report that a pounded-down Citigroup Inc. might put itself up for sale. That prospect, along with the possibility that low prices will draw in bargain-hunters after two days of steep selling, sent stock futures sharply higher.

The market's optimism about Citi and the financial sector overall came after The Wall Street Journal reported late Thursday that Citigroup is considering the possibility of selling parts of itself or even the entire company following a plunge in its stock price. The shares, which lost 26 percent Thursday alone, are down 84 percent for the year.

The financial sector led the market lower Thursday as investors worried that losses from souring debt will swamp banks, even those given financial support through the government's $700 billion rescue plan. Citigroup, in particular, is a concern for Wall Street because the company hasn't booked a profit in the past four quarters, unlike rivals such as JPMorgan Chase & Co. and Bank of America Corp.

Beyond the banking sector, better-than-expected earnings from Dell Inc. offered some reassurance that profit-making is continuing even with consumers reluctant to spend. The computer maker reported a 5 percent drop in its fiscal third-quarter earnings and a 3 percent decline in revenue, but the profit came in well ahead of what Wall Street had expected.

A move higher in stock futures wasn't necessarily a surprise given the scope of the selling in the past two days. Sharp market declines often attract bargain hunters. On Thursday, the Standard & Poor's 500 index fell 6.7 percent to its lowest close since April 1997, while the Dow Jones industrial average fell 445 points, or 5.6 percent, to its lowest finish since March 2003.

Early Friday, Dow futures contracts rose 211, or 2.82 percent, to 7,700 following a two-day drop in the blue chips of 10.4 percent, the biggest two-day slide since October 1987.

Standard & Poor's 500 index futures rose 21.60, or 2.89 percent, to 769.90. Nasdaq 100 index futures rose 27.75, or 2.67 percent, to 1,067.25.

While the indexes pointed to a sharply higher open, light trading volume can make stock futures contracts an imperfect predictor of how the market will start the day.

And the expiration Friday of some options contracts for November is likely add to the market's volatility.

With the steep pullbacks on Wednesday and Thursday, the Dow is down 43.1 percent this year, while the S&P 500 index - a benchmark for the overall U.S. stock market - is down 48.8 percent. The Nasdaq composite index has lost 50.4 percent this year.

Bond prices fell early Friday as credit markets eased following a freeze-up Thursday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.12 percent from 3.00 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, jumped to 0.07 percent from 0.01 percent late Thursday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose 95 cents to $50.37 in premarket electronic trading on the New York Mercantile Exchange.

Overseas, stocks fluctuated on hopes that Wall Street will bounce higher after the two-day rout. Japan's Nikkei stock average jumped 2.70 percent. In afternoon trading, Britain's FTSE 100 rose 0.94 percent, while Germany's DAX index fell 0.22 percent, and France's CAC-40 slipped 0.13 percent.

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(Copyright 2008 by The Associated Press. All Rights Reserved.)