Wall Street points to moderately higher open

Wall Street began a holiday-shortened week on a cautious note Monday, with stock futures pointing moderately higher as investors searched for any signs of good news.

With no economic data scheduled for Monday, and very little by way of corporate earnings expected this week, some analysts expect investors to wade back into the market in search of bargains as the year comes to a close.

But a bleak outlook from Toyota Motor Corp. provided more evidence of companies' struggles amid a sharp drop around the world in demand for products of all kinds.

Toyota slashed its earnings forecast for a second time, warning that it now expects to report an operating loss for the fiscal year through March. It would be the company's first such loss since it began reporting results in 1941. Sinking U.S. sales have dealt a big blow to the Japanese automaker.

The announcement underscores the challenges that remain for car companies, whose growth has been halted by the weak economy. Toyota's American rivals, General Motors Corp. and Chrysler LLC, received a $17.4 billion lifeline from the federal government on Friday, in a move to stave off a major bankruptcy.

While investors cheered the government's pledge to provide assistance to the ailing automakers, they are wary about whether the aid will be enough to turn around the companies. The financing hinges on strict conditions that must be quickly met; GM and Chrysler must prove viability, defined as positive cash flow and the ability to pay back government loans, by March 31. Ford Motor Co., meanwhile, is not asking for short-term assistance.

Still, stocks finished a choppy session on Friday mostly higher in response to the aid. The Dow Jones industrial average ended the week down 0.59 percent, while the Standard & Poor's 500 index finished up 0.93 percent and the Nasdaq composite index up 1.53 percent.

Wall Street has shown some signs of relative stability in the last few weeks. Since reaching multiyear lows on Nov. 20, the Dow is up 13.6 percent and the S&P 500 is up 18 percent.

Besides relief over the auto bailout, investor sentiment has also grown a bit more upbeat in the past few trading sessions after the Federal Reserve cut the benchmark federal funds rate to a range of zero to 0.25 percent. Investors are looking for any signs that the government is being proactive about reviving the economy.

Meanwhile, some of the nation's largest property developers are seeking government assistance as the threat of default on commercial properties is growing, according to a Wall Street Journal report on Monday.

Investors will likely be looking ahead to reports on new home and existing home sales for November, as well as the government's third-quarter gross domestic product report, which will be released on Tuesday.

Volume is expected to remain light this week as many investors take vacations. Light volume tends to skew the market's movements.

"A truncated week is going to make it tough to generate any firm takeaways from trading," said Craig Peckham, equity trading strategist at Jefferies & Co. "I would expect to see sleepy volumes and a lot of people protecting positions going into year end."

Dow Jones industrial average futures rose 42, or 0.49 percent, to 8,575. Standard & Poor's 500 index futures rose 3.60, or 0.41 percent, to 884.90, while Nasdaq 100 index futures gained 6.25, or 0.52 percent, to 1,217.25.

In corporate news, American International Group Inc. is selling its Hartford Steam Boiler unit to reinsurer Munich Re AG for $742 million as it works to shed assets in an effort to pay back a government loan. AIG received a $150 billion rescue package from the government last month to help it pull through the credit crisis. That bailout replaced a previous $85 billion loan from the Federal Reserve as it became apparent the insurer needed more funds to survive.

Bond prices were mixed early Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.14 percent from 2.21 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.01 percent from zero late Friday.

Light, sweet crude rose 69 cents to $43.05 a barrel in electronic trading on the New York Mercantile Exchange.

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

Overseas, Japan's Nikkei stock average rose 1.57 percent, while Hong Kong's Hang Seng index dropped 3.34 percent. In afternoon trading, Britain's FTSE 100 was down 0.90 percent, Germany's DAX index was down 0.35 percent, and France's CAC-40 was down 0.71 percent.

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(Copyright 2008 by The Associated Press. All Rights Reserved.) AP-NY-12-22-08 0839EST