Wall Street Heads Toward Lower Open

NEW YORK — U.S. stocks were poised to drop sharply Wednesday, with investors reacting to a tumble in stocks overseas and preparing for disappointment ahead of more economic and earnings reports.

Wall Street — which will take a rest Thursday for the Thanksgiving holiday — has been thrashing around recently as investors attempt to guage how companies around the world will fare amid a further slowdown in the U.S. housing market, the deterioration of credit and record oil prices that crested $99 a barrel early Wednesday.

Investors abroad looked pessimistic Wednesday. In Asian trading, Japan's Nikkei stock average sank 2.46 percent, while Hong Kong's Hang Seng index dropped 4.15 percent. In European trading, Britain's FTSE 100 fell 1.57 percent, Germany's DAX index fell 1.87 percent, and France's CAC-40 fell 1.99 percent.

With the housing market worsening — the Mortgage Bankers Association said mortgage application volume fell 3.6 percent last week — investors remain nervous about financial institutions. Government-sponsored lender Freddie Mac, which reported a $2 billion quarter loss Tuesday and saw shares plummet nearly 29 percent, declined another 6 percent in pre-market trading.

At 8:30 a.m. EDT, the Commerce Department releases its weekly jobless claims report, and at 10 a.m., the Conference Board reports on leading indicators and the University of Michigan offers its reading on consumer sentiment.

Dow Jones industrial futures fell 133, or 1.02 percent, to 12,927. Standard & Poor's 500 index futures dropped 16.00, or 1.11 percent, to 1,429.90. Nasdaq 100 index futures slumped 20.75, or 1.02 percent, to 2,014.75.

The stock market managed to finish with a gain Tuesday, upbeat about an economic forecast that seemed to imply that the Federal Reserve is willing to keep lowering rates. But the advance came after frenetic triple-digit swings in the Dow Jones industrials as investors wrestled with losses at Freddie Mac and its counterpart Fannie Mae, and possible liquidity woes at mortgage lender Countrywide Financial Corp.

And with oil prices briefly reaching a high above $99 a barrel in overnight electronic trading, the question among investors is no longer if oil will reach $100 a barrel, but when — and how long it will stay there.

By Wednesday morning, crude futures in pre-market electronic trading on the New York Mercantile Exchange were up 29 cents to $98.32 a barrel. Whether they settle at a new record will depend much on the Energy Department's inventory report, scheduled to be released at 10:30 a.m.

The dollar rose against most other major currencies, but fell versus the yen. Gold advanced.

In earnings news, Deere & Co. posted a 52 percent profit rise for the most recent quarter, thanks to robust sales of agricultural and commercial equipment.

Gap Inc. will also release quarterly financial results Wednesday.

The bond market closes early Wednesday ahead of the Thanksgiving holiday.

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