Stocks point to lower open

Wall Street headed for a sharply lower opening Wednesday after economic data raised the possibility that the country is either in a recession or moving toward one. The government reported that retail sales plunged in September by 1.2 percent last month - almost double the 0.7 percent drop analysts had expected.

The Commerce Department report was sobering because consumer spending accounts for two-thirds of total U.S. economic activity. Wall Street has refocused its attention on the economy now that the government is working to ease the stagnant credit markets.

Investors were also reacting to third-quarter earnings from two banks caught up in the mortgage mess. In another sign of how the financial crisis is slamming the economy, JPMorgan Chase & Co. reported an 84 percent decline in its third-quarter profit.

JPMorgan, which bought the assets of failed bank Washington Mutual Inc. late last month as a result of the mortgage bust, said the profit drop reflected losses on bad mortgage investments, leveraged loans and home loans.

Still, the results beat expectations. The company earned $527 million, or 11 cents per share, compared with $3.4 billion, or 97 cents per share, a year earlier. Analysts polled by Thomson Reuters expected a loss of 21 cents per share.

Also Wednesday, Wells Fargo & Co. reported that its third-quarter profits fell 23 percent after it took hits on investments in troubled finance companies and increased its credit reserves. The results also were better than analysts had expected.

For the July-to-September period, Wells Fargo earned $1.64 billion, or 49 cents per share, compared with $2.17 billion, or 64 cents per share, in the prior-year quarter.

On Tuesday, for the first time in nine sessions, the Dow Jones industrial average did not finish the day with a triple-digit loss or gain. Instead, after swinging erratically throughout the session, the blue-chip index closed the day down 76 points following Monday's record 936-point advance.

Ahead of the market's open Wednesday, Dow futures fell 157, or 1.67 percent, to 9,205. Standard & Poor's 500 index futures fell 21.30, or 2.13 percent, to 981.00, and Nasdaq 100 index futures fell 14.75, or 1.08 percent, to 1,351.25.

The stock market is trying to recover from a dismal week that erased about $2.4 trillion in shareholder wealth and brought the Dow to its lowest level since April 2003. The tumble occurred amid a seize-up in lending stemming from a lack of trust among institutions in response to the bankruptcy of investment bank Lehman Brothers Holdings Inc. and the failure of Washington Mutual Inc., which had been the nation's largest thrift.

Analysts have warned that the market will see continued volatility as it tries to recover from the devastating losses of the last month, including the nearly 2,400-point plunge in the Dow over eight sessions. Such turbulence is typical after a huge decline, but the market's uneasiness about the economy will also be reflected in the gyrations expected in the weeks and months ahead.

The credit markets have been showing signs of recovery, but they are far from healthy, and demand for safe assets remains extremely high. The three-month Treasury bill on Wednesday was yielding 0.19 percent, down from 0.30 percent on Tuesday. When yields are low, it shows that demand is so high that investors are willing to earn meager returns as long as their principal is preserved.

In other economic data Wednesday, the Labor Department said the producer price index, which measures inflation pressures before they reach the consumer, fell 0.4 percent in September, driven by lower energy costs. That decline matched analysts' expectations.

Late Tuesday, Intel Corp., the world's largest maker of PC microprocessors, beat analysts' estimates and posted a third-quarter profit increase of 12 percent.

In Asian trading, Hong Kong's Hang Seng Index lost nearly 5 percent after rising more than 13 percent the previous two days. Markets in Australia, South Korea, China, India and Singapore also sank. Japan's Nikkei 225 index, however, ended up 1.1 percent at 9,547.47 after soaring 14 percent in the previous session.

In morning trading in Europe, Britain's FTSE 100 fell 3.24 percent, Germany's DAX index fell 2.63 percent, and France's CAC-40 fell 2.59 percent.

Crude oil fell $2.60 to $76.03 a barrel in premarket electronic trading on the New York Mercantile Exchange. The dollar fell against other major currencies.