Freddie Mac’s Deep Losses Set Up Tough Trading Day
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Wall Street headed for a mixed open today after troubled mortgage financier Freddie Mac reported a larger-than-expected second-quarter loss.
Freddie Mac said earnings fell $821 million, or $1.63 per share, for the quarter ended June 30, compared with a profit of $729 million, or 96 cents per share, in the year-ago period. Analysts surveyed by Thomson Financial had expected a loss of 53 cents a share.
Freddie Mac and sister company Fannie Mae, which hold or back nearly half of all American mortgage debt, have lost billions of dollars due to souring loans over the past year. The federal government has pledged to help both companies with larger lines of credit or stock purchases if necessary.
Wall Street soared yesterday after the Federal Reserve issued a reassuring statement on the economy and as the price of oil extended its decline. The Dow Jones industrials shot up more than 330 points; some pullback was to be expected Wednesday after a huge move upward.
In premarket trading, Dow futures fell 34, or 0.29%, to 11,551.
The Standard & Poor’s 500 index futures fell 3.80, or 0.30%, to 1,279.10, and the Nasdaq 100 index futures rose 2, or 0.11%, to 1,871.
Bonds rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4% from 4.02% late yesterday. The dollar was mixed against other major currencies, while gold prices rose.
Investors are also keeping an eye on crude oil after prices fell sharply in the last two sessions.
Light, sweet crude for September delivery rose 33 cents to $119.50 in premarket electronic trading on the New York Mercantile Exchange.
Overseas, Japan’s Nikkei stock average rose 340.23, or 2.63%, to 13,254.89. In afternoon trading, Britain’s FTSE 100 was up 9.30, or 0.17%, to 5,463.80. Germany’s DAX index fell 7.92, or 0.12%, to 6,510.78, and France’s CAC-40 rose 12.52, or 0.29%, to 4,398.87.