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U.S. stocks futures were mixed Friday morning, trading in a tight range, indicating a mixed open on Wall Street ahead of the latest GDP reading and as investors awaited to hear details about Citigroup's deal with the government. [Update: Futures have turned south on the announced Citi deal. Stocks may see another day of declines.][Update 2: Futures declined even more after GDP showed the economy contracted even more than expected -- 6.2% in the quarter, worse performance since 1982.]
Citigroup (NYSE: C) is expected to get another rescue package from the U.S. government, which means an increased ownership of the government in the struggling bank. Citigroup, in return, will have to agree to changes in its board (but not ousting CEO Pandit) and to other conditions. The increased stake will not require additional money from taxpayers as the government will convert about $25 billion in preferred shares to give it control of between 30% and 40%. Citi will still have to undergo a "stress test." An announcement is anticipated later Friday.
[Update: Citi reached a deal and as expected, the government will convert its $25 billion in preferred shares. Citi shares are tanking some 44% in pre-market trading. Other banks joined the declines.]
At 8:30 a.m. Eastern time, an hour before the opening bell, the Commerce Department will release fourth-quarter GDP. Economists expect the broadest measure of economic activity to show a much steeper decline than the government initially thought. Moreover, the economy is likely still doing just as poorly now -- if not worse -- as negative forces feed on each other, pushing the country deeper into recession. Economists expect GDP to show the economy contracted at a pace of 5.4% in the last quarter of 2008. The government forecast 3.8%.
Overseas, Asian stock markets were narrowly mixed Friday, while European shares fell. Some news from abroad include Eastern Europe's struggling banks receiving $31.1 billion worth of emergency help from leading international financial institutions, Japan's industrial output tumbling 10% in January and Euro-zone unemployment rate rises to 8.2% in January.
Bank stocks will continue to be in focus today as other than nationalization fears and the deal with Citi, the FDIC Thursday said its latest problem bank list had swelled to 252 -- the highest since 1994 and that the nation's banks lost $26.2 billion in the last three months of 2008.
Other economic indicators due out today include the February Chicago PMI and Michigan Sentiment.
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