Credit jitters, higher oil hits futures

Stock index futures fell on Thursday as fears of more credit losses in the financial sector rattled investors and shares of mortgage finance giants Fannie Mae and Freddie Mac slid anew.
Investors stepped into news of brokerages essentially cutting each others outlooks and some forecasting a fresh wave of write-downs at investment banks, including Lehman Brothers and Goldman Sachs.
Other headwinds were persistent worries about the viability of U.S. home finance providers Fannie Mae and Freddie Mac, whose shares fell 3% and 10.5%, respectively, before the bell.
The two companies are a critical pillar of the U.S. housing market. A recovery in oil prices back above $117 a barrel also threatened to hamper the market, even though the bounce could boost shares of energy companies. Worry about the financial sector had markets under pressure in Asia overnight, and drove losses in Europe on Thursday.
"Today you have the lowering of estimates on a group of financials and that definitely hurts. The other factor is that oil is up this morning," said Matt McCall, president of Penn Financial Group based in Denver Colorado. "So put those two together, it's tough for equities to move higher this morning."
S&P 500 futures fell 5 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures declined 47 points and Nasdaq 100 futures slid 8 points.
Citigroup analyst Prashant Bhatia widened his third-quarter loss estimate for Lehman Brothers.
In addition, Bhatia and Lehman Brothers analyst Roger Freeman cut their third-quarter earnings estimates for Goldman Sachs and Morgan Stanley.
Bhatia projected Lehman to take an additional $2.9 billion of write-downs in the third quarter. He expects $1.8 billion of writedowns at Goldman and $1.7 billion at Morgan Stanley.
U.S. front-month crude jumped $1.59 to $117.15 a barrel as the dollar pulled back sharply from this week's eight-month highs versus a basket of currencies.
Economic indicators due on Thursday include weekly jobless claims at 8:30 a.m. EDT and a reading of business activity in the U.S. Mid-Atlantic region at 10 a.m. EDT.
U.S. stocks rose in thin choppy trade on Wednesday as bank and energy shares rebounded even as investors fretted about the viability of home finance companies Fannie Mae and Freddie Mac.