Stock futures were once again lower this morning, setting up stocks for a sharp decline after AIG reported a big $7.8 billion loss and oil set a record above $125 a barrel. With credit crunch concerns resurfacing and inflation worries on investors' minds, futures point to heavy losses today.

On Thursday, U.S. stocks ended higher despite another surge in oil prices following better-than-expected April sales reports from many retailers including Wal-Mart and Costco. The Dow industrials ended 52 points, or 0.41%, higher, the S&P 500 rose 5 points, or 0.37% and the Nasdaq Composite rose 12 points, or 0.52%.

Without much economic news set for today except for the March U.S. trade gap, investors will focus on AIG's results and their implication on the financial and credit market as well as on oil prices.

American International Group (NYSE: AIG) reported a quarterly $7.8 billion loss after the market close Thursday. AIG also said it will raise $12.5 billion in the coming months as its capital base has deteriorated due to the crisis in the credit markets. Shares of AIG have declined over 7.2% in premarket trading, but the real affect of its results can seen across the financials as fears have resurfaced once again about the impact of the credit crunch on financial firms.

As if that was not enough, adding to the negative sentiment is oil. Crude oil for June delivery climbed as much as $1.43, or 1.3%, to $125.12 a barrel. While prices have retreated somewhat, they remained near $125 at around $124.8 a barrel. For the week, oil has risen 7.4%, making Wall Street nervous about inflation. Mind you, 55%of 372 petroleum industry executives surveyed by KPMG LLP said they think the price of a barrel of crude will drop below $100 by the end of the year.