Fannie Mae, Productivity Report Keep Wall Street Stocks Low

August 8, 2008 9:48 a.m. EST

New York, NY (AHN) - Wall Street may be headed for a mixed start on Friday as investors could be disappointed with the mortgage finance giant Fannie Mae, which reported a much larger-than-expected loss in the second quarter.

The latest report from the troubled lender showed further signs of slumping housing and weakening credit market condition, offsetting the positive news from MBIA.

The beleaguered firm, which have found difficult to raise fresh capital enough to shore up its weakened balance sheet, reported a net loss of $2.3 billion, or $2.54 a share.

The firm reported that it will slash its quarterly dividend to 5 cents on each share, which is down by 86 percent from its previous level.

At 9:48 a.m. EDT in New York, Standard & Poor's 500 Index futures was trading up by 1 point at 1,266.07 points, Dow Jones Industrial Average futures was up by 13 points at 11,444 points.

At the same time, NASDAQ- 100 Index futures was up by 6 points at 2,365.

In commodities, crude oil dropped $2.42 but remained at $117.60 a barrel..

Oil futures declined by $1.96 to near $118.06 a barrel on the New York Mercantile Exchange as the U.S. dollar gained against other major currencies.

Fannie Mae shares moved down by 7 percent in pre-market trading session.

Some positive news came from insurance sector as bond insurer MBIA reported a $1.7 billion profit, led by derivatives and unchanged estimate on mortgage-related losses.

Additionally, the government reported on second-quarter productivity before the markets opened showing the U.S. firms reducing workforce and working hours but maintained productivity growth relatively high.

Productivity in the second quarter in the business sector increased by 2.2 percent at an annual rate, missing the projected estimate by the market analysts.

Output was reported to be at an annualized rate of 1.7 percent in the second quarter, while hours worked by employees dropped by 0.5 percent and unit labor costs increased by 1.3 percent.

General Motors Corp., which is the largest U.S. carmaker, moved up by 13 cent to $9.88 in German trading as oil dropped more than $2 a barrel overnight on Friday.

In currency trading, the yen changed hands at 109.60 yen per U.S. dollar in Asia. In late New York on late Thursday, the Japanese currency was at 109.31 yen against the dollar.