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Wall Street is looking at a lower open after insurer and Dow industrials component American International Group swung to a heavy fourth-quarter loss on credit write-downs, with disappointing results from computer maker Dell further undermining sentiment.

According to spread bettors IG Index, the Dow Jones Industrial Average is expected to open down 69 points at 12,513. Separately, S&P 500 futures were down 7.70 points at 1,358.10 while Nasdaq 100 futures dropped 8 points to 1,776.25.
Stocks sank Thursday as investors fretted over a rise in unemployment claims and the prospect of more bank failures. The Dow Jones industrial average fell 112.10 points, or 0.88%, to close at 12,582.18, while the Nasdaq composite slid 12.10, or 0.88%, to 12,582.18, and the S&P 500 index declined 12.34, or 0.89%, to 1,367.68. Elsewhere, the yield on the benchmark 10-year Treasury note fell to 3.67% from 3.85% late Wednesday, and crude oil jumped $2.95 to settle at a record $102.59 a barrel on the New York Mercantile Exchange.

ECONOMIC DATA:

• Personal income for January, 8:30 a.m. ET
• Chicago PMI for February, 9:45 a.m. ET

EARNINGS HIGHLIGHTS:

Company Symbol Estimate

Berkshire Hathaway Inc. BRKA $1,606
Brown-Forman Corp. BFB 98c
Interpublic Group IPG 22c
Pepco Holdings Inc. POM 34c
Progressive Corp. PGR 33c

AFTER-HOURS ACTION:

After Thursday’s closing bell, American International Group said it swung to a hefty loss for the fourth quarter as bad credit hurt the insurer’s investment portfolio. In other after-hours action, Dell Inc. said fourth-quarter profit dropped 6.4% and fell short of Wall Street expectations; Gap Inc. said its fourth-quarter profit rose 21%, reflecting gains from cost cutting; and Viacom Inc. said its fourth-quarter earnings rose 16% on gains in its cable channels and movies.

Shares of both AT&T and Verizon rallied Thursday, but Sprint-Nextel’s stock pulled up lame after the wireless communications provider reported weak fourth-quarter results, bogged down by a massive goodwill impairment charge and a disappointing first-quarter outlook.

In an attempt to get itself back in the race, Sprint launched its $99.99 per-month “Simple Everything” plan. Following announcements made by AT&T, Verizon and T-Mobile last week, Sprint introduced its new version of unlimited calling whereby its users will receive unlimited calling, unlimited text and multi-media messaging, web browsing, and e-mail - all for one price. Also included are Sprint’s TV, music and navigation services.

“We view today’s Sprint action as a ‘Hail Mary,’ ” Bear Stearns analyst Mike McCormack said, “leaving price as the only warhead left in the arsenal.”

Although Sprint’s pricing is discounted relative to both AT&T and Verizon, both competitors offer unlimited voice only and do not include the same the bells and whistles, which are typically provided for additional costs. McCormack said AT&T’s comparable offering to Sprint’s cost $144.99 (including $10 for Navigator), while Verizon’s is $139.99; however, neither included push-to-talk (a $9.99 add-on for AT&T and Verizon).

“We believe with substantial subscriber losses expected at Sprint for the next few quarters, AT&T and Verizon will remain very disciplined on price,” McCormack added. “While we will be watching for share shift, we do not think price alone will drive subscribers to Sprint.”

Nor did it drive investors to the company’s shares, as the stock dropped to a fresh five-and-a-half year low of $7.75 before paring some of its losses. Both AT&T and Verizon shares posted gains of more than 2%.

There’s a self-fulfilling aspect to economic projections. If enough people believe something will, or has already happened, then it will happen.

“Many economists debate whether we’re in a recession or on the verge of one,” said Ken Goldstein, labor economist at The Conference Board. “What’s more important is that people are behaving as if a recession is already here.”

Earlier in the week, the think tank’s consumer confidence index fell to 75.0 in February from 87.3 in January, the lowest level seen since March 2003, and well below the 81.3. median forecast of economists surveyed by IFR Markets.

The Conference Board followed that up on Thursday by saying its Help-Wanted Advertising Index, which tracks job ads in major

Separately, the U.S. Labor Department said initial claims for unemployment insurance rose 19,000 to 373,000 in the week ending Feb. 23, above the median estimate of economists surveyed by IFR Markets of 350,000. Continuing claims for the week ending Feb. 16 increased 21,000 to 2.807 million, above economist forecasts of 2.8 million and the highest level since October 2005.

“The weakness in the labor market data on job advertising in print suggests there’s virtually no chance that labor market activity will improve over the next few months,” Goldstein said. “To the contrary, there is a chance the labor market could grind to a halt.”

That doesn’t bode well for next week’s February employment report. Economists are currently expecting nonfarm payroll growth of 40,000 and the unemployment rate to remain at 5%, but what if everyone already believes the labor market is already really bad?

The one bright spot for the stock market is that if the February jobs numbers are much worse than expected - there’s a chance that the Federal Reserve might not wait for its March 18 policy-setting meeting to try to change the market’s belief.

Fed Chairman Ben Bernanke told Congress Thursday that the Fed, “in general,” preferred to make moves at regular scheduled meetings. But what if enough people believe the economy will, or already has, ground to a halt?

Wall Street is looking at a lower open ahead of a raft of economic reports and a second day of congressional testimony from Federal Reserve Chairman Ben Bernanke.

According to spread bettors IG Index, the Dow Jones Industrial Average is expected to open down 67 points at 12,627. Separately, S&P 500 futures were off 7.80 points at 1,372.60 while Nasdaq 100 futures dropped 4 points to 1,796.25. “The Fed testimony did little to boost the market,” said Tom Hougaard, strategist at City Index. “I suspect that investors are still concerned about the length of the crisis in the credit market.”

Hougaard said the major indices are flirting with a technical breakout to the upside but traders remain cautious after the pullback in January.

On Wednesday, Wall Street finished mixed in another seesaw session after regulators allowed Fannie Mae and Freddie Mac to buy more mortgages and Federal Reserve Chairman Ben Bernanke said the central bank will remain vigilant about the weakened economy. The Dow Jones industrial average rose 9.36 points, or 0.07%, to close at 12,694.28, while the Nasdaq composite index gained 8.79, or 0.37%, to 2,353.78, and the S&P 500 index lost 1.27, or 0.09%, to 1,380.02. Elsewhere, the yield on the benchmark 10-year note fell to 3.85% from 3.86% late Tuesday, and a barrel of oil fell $1.24 to settle at $99.64 on the New York Mercantile Exchange.

ECONOMIC DATA:

• Gross domestic product (prelim.) for fourth quarter, 8:30 a.m. ET, up 0.7% estimate
• Initial jobless claims for week ended Feb. 22, 8:30 a.m. ET, 350,000 estimate

EARNINGS HIGHLIGHTS:

Company                         Symbol  Estimate

American International Group    AIG     67c
Barr Pharmaceuticals            BRL     74c
Dell Inc.                       DELL    36c
Freddie Mac                     FRE     ($2.54)
Gap Inc.                        GPS     34c
Kohl’s Corp.                    KSS     $1.30
Figures in parentheses are losses.

AFTER-HOURS ACTION:

After Wednesday’s closing bell, Salesforce.com Inc. reported a jump in fiscal fourth-quarter profit, predicted its fiscal first-quarter and full-year earnings will meet or beat analysts’ expectations, and raised its 2008 revenue outlook. In other after-hours action, Limited Brands Inc. said its fourth-quarter profit fell 12%, and the company warned that its first-quarter earnings will miss Wall Street estimates.

Commodity prices have stubbornly refused to bow to fears of a global economic downturn. Maybe it’s time to stop using them as a reliable guide to global growth prospects.

If you believe in growth indicators and economist forecasts, the world economy is set to slow down, at least moderately, as the subprime and credit crisis continues to spread and higher energy costs take their toll.

But the commodities market is painting a different picture. Oil hit a record of $102.08 a barrel in nominal prices Wednesday. Gold is getting ever closer the $1,000 psychological mark, and palladium, platinum, wheat, and coal prices all soared. Even industrial metals, such as aluminum, and tin, and the all-important market bellwether, copper — are defying fears of an economic downturn. The Reuters-Jefferies CRB Index rose to a record high on 407.52 in intraday Wednesday.

Growing concerns of inflation and broad weakness in the dollar, which sank to an all-time low, may have played a key role behind the latest rally, but Stephen Kirchner, an analyst at research firm Action Economics, pointed out that the recent surge may be reflecting a “complex array” of demand and supply-side shocks that are masking the impact on prices that we might normally expect to see from slower growth in the U.S. and the rest of the world.

For example, Kirchner said that while capital expenditure in the Australian mining industry has grown sharply after contracting in the late 1990s and early 2000s, the capital-intensive nature of the mining industry means that much of this new investment will take many years before it yields higher output and lower commodity prices. Shorter-term supply-side shocks, such as the weather-related supply disruptions in China and Australia, have also helped drive higher prices of some commodities, such as coal. The massive U.S. and E.U. bio-fuel mandates are another supply-side factor pushing up soft commodities, he said.

Kirchner argued that the current boom in commodity prices is in many respects “the flip-side” of the mid-late 1990s downturn in the commodity market, which saw chronic under-investment in commodity production and commodity-related infrastructure. Chronic supply-side constraints “have now coupled with the demand shock emanating from emerging market economies like China and India to drive commodity prices higher,” he wrote in a research note.

So if that’s the case, “we should be cautious about concluding that continued strength in commodity prices signals a de-coupling of growth prospects in the major economies from those of the rest of the world,” he said.

Global demand for oil will likely exceed 100 million barrels a day by 2015, but it will become increasingly difficult for oil producers to squeeze oil from reserves at a rate that keeps pace with demand, according to a new report from Deutsche Bank analyst Paul Sankey.

“[T]he ‘easy oil’ is running out and access is more difficult, yet the treadmill is getting faster.,” Sankey said. The implication of 100 million barrels a day in 2015 is that supply growth “must accelerate to unprecedented levels,” he said.

The current market is 88 million barrels a day, growing at a rate of 1.5 million barrels a day per year. Sustaining a production rate of 100 million barrels a day requires about 8 million barrels a day in new annual supply — a level that’s never been reached, Sankey said.

In the meantime, oil could reach $150 (normalized) a barrel in 2010.

But even as the price of black gold continues to climb, reminding some of the OPEC supply squeeze and skyrocketing prices during the oil  crisis of the 1970s, there are notable differences between 1979 - when oil prices spiked enough to cut demand sharply - and the current oil predicament, Sankey said.

That’s not only because demand has failed to ease even as prices have risen at the pump and elsewhere.

Other factors are also in play: since 1979, major industrialized economies have phased out earlier, less efficient oil use — in power generation, for example — and so oil demand is less elastic than it was 30 years ago, when there was much more dependence on oil.

The global demand picture has changed, too, Sankey said.

“Global economic strength is such that oil demand growth is driven globally from regions that were economically insignificant in the 1970s. We have reverse elasticity whereby high oil prices reduce oil supply and increase (Middle Eastern) oil demand.”

What’s more, consumption in China and India has soared since the crisis of the Carter years. This time around, cheap oil is much more central to both economies, Sankey noted.

While the U.S. will probably be able to adjust to a tighter oil supply, China will likely experience a 2% to 4% reduction in GDP growth of because of high oil prices, and India, a GDP impact of 2 percentage points annually.

It’s worth nothing that the U.S. continues to consume much more oil than other regions — and that even relatively small adjustments to oil consumption in the U.S., such as increased vehicle fuel efficiency — would have an enormous impact on global oil consumption, Sankey said.

All this is good news for oil producers, of course, notwithstanding risks such as a drop in the current wave of major economic expansion, which could sweep away oil demand.

Sankey is basically bullish on oil and named Occidental Petroleum Corp., Hess Corp. and Suncor Energy Inc. his top picks.

Contemporary art connoisseurs aren’t the only ones interested in Sotheby’s contemporary art auction in London Wednesday night. Analysts are likely to have their eyes glued to the gavel, refraining from casting their own bids on the company’s future until getting a better sense of the global art market’s strength.

Although the New York City-based auction house recorded better-than-expected fourth-quarter results, the difficult macroeconomic environment has made analysts hesitant to paint a rosy future for Sotheby’s.

“If contemporary art results are decent, it would help our comfort level with the strength of the art market and upcoming auctions,” Koerber said.

JPMorgan analyst Steven Rees took a similar stance. “While the quarter was solid in the context of a difficult U.S. environment, all eyes will be on Wednesday night’s contemporary auction in London,” Rees said. He cut his 2008 estimate by 12 cents based on the fourth quarter’s lower operating income base and remained open to making additional adjustments depending on tonight’s results.

Pre-sale estimates for the London event range between $175 million and $249 million, up significantly from $124 million a year ago, according to the company’s fourth-quarter report.

Tonight’s auction features Francis Bacon’s “Study of Nude with Figure in a Mirror,” a rare portrait of his close friend, Henrietta Moraes, and a male figure speculated to be Bacon himself, and Andy Warhol’s “Three Self Portraits,” a trio expected to fetch more than $20 million.

Time is running out, and there’s no airline deal yet.

The most-talked about deal, a combination of Delta Air Lines and Northwest Airlines, is stalled over the issue of pilot seniority-specifically how much more of a raise Northwest pilots will get to match their Delta counterparts.

But wait, aren’t mergers supposed to save money by cutting costs?

“This is a game of high stakes chicken,” analyst Michael Derchin, of FTN Midwest, said.

Delta is holding firm on its five merger conditions, not all of which have been met, the carrier’s chief executive said in a memo Tuesday:

• that the airline be called Delta, headquartered in Atlanta;
• that the seniority of our people is protected;
• that the pension plans of our employees and retirees are maintained;
• that the network is strengthened and our plans for international expansion are accelerated;
• and, most importantly, that there is even greater job security along with more career opportunities for our people

Time is running out if the airline industry hopes to get antitrust approval from the outgoing Bush administration, others on Wall Street have speculated, a process that could take six to nine months.

Share prices of Northwest and Delta have retreated more than 20% from their highs so far this year as investors began to doubt a deal was near. Without any merger premiums, said CreditSights airline analyst Roger King, airline stocks could trade down to distressed levels.

“Despite significant rhetoric from industry participants, a compelling financial reason for airline mergers has not been made,” said King. Delta and Northwest’s market value jumped by $4 billion after word leaked that the two were in talks - well above any current multiple of near-term costs savings, King said.

Delta-Northwest — and even a United Airlines-Continental Airlines combo that a Northwest deal makes possible — are “non events until further notice,” he added.