Consumer confidence dropped to 105 in August.

Tuesday morning, the Conference Board released its report on consumer confidence in the month of August, showing that its consumer confidence index fell roughly in line with economist estimates. The report showed that the consumer confidence index fell to 105.0 in August from a downwardly revised 111.9 in July.

Economists had expected the index to drop to 104.5 compared to the 112.6 originally reported for the previous month. The Conference Board also said that the present situation index fell to 130.3 in August from 138.3 in July, as those claiming conditions are ‘good’ decreased to 26.4 percent from 28.3 percent and those saying conditions are ‘bad’ increased to 16.3 percent from 14.5 percent.

The report also showed that the expectations index declined to 88.2 from 94.4 in the previous month, as those expecting business conditions to worsen in the next six months rose to 10.6 percent from 8.2 percent. The labor market outlook was also less favorable, with those expecting more jobs in the months ahead falling to 13.0 percent from 13.8, while those expecting fewer jobs increased to 15.3 percent from 14.9 percent.


09:45AM Wall Street opened lower ahead of consumer-confidence data. Bank stocks weighed.

Wall Street declined at opening for a second day Tuesday, with investors nervous before a likely drop in consumer confidence and commentary from the Fed Reserve. The FOMC is expected to release the minutes of its Aug. 7 policy-setting meeting, which could give a clue about the central bank''s intentions before its next meeting in September.

At the last meeting, policymakers kept rates steady and pointed out that inflation remains its main concern despite credit-market turmoil and slowing housing market. The Fed has recently lowered the discount rate, the interest it charges banks.

Market sentiment was additionally hurt by losses in the shares of three giant investment banks. Citigroup (C) dropped 4.1%, Lehman Bros (LEH) fell 2.3% and Bear Stearns (BSC) declined 2.3% after Merrill Lynch cut its rating on the stocks to neutral from buy, citing the impact of debt market exposure. Street (STT) was another notable mover in the sector, falling 3.3% on a report it has exposure to $22 billion of asset-backed commercial paper conduits

In earnings-related news, Coronthian College (COCO) lost 0.4% after it reported a lower Q4 profit. Borders Group (BGP) is also expected to report a Q2 loss, due to stiff competition from rivals including Wal-Mart Stores and Amazon.com.

In the first hour of trading, the Dow Jones industrial average fell 69.58, or 0.52% to 13,252.55. The Standard & Poor''s 500 index was down 10.23, or 0.70%, at 1,456.56, and the Nasdaq composite index shed 19.20, or 0.75%, to 2,542.05.


09:00AM U.S. stock futures pointed to lower opening ahead of data.

U.S. stock futures looked inclined to lower opening Tuesday, reflecting nervousness ahead of consumer-confidence data and fears that financial markets turmoil will spill over into the broad economy. The Conference Board''s gauge is expected to have dropped sharply. A broker downgrade of three giant investment banks further weighed sentiment down.

Citigroup (C)) lost 1.2%, Lehman Bros (LEH) dropped 2.6%, and Bear Stearns (BSC) slipped 2.9% after Merrill Lynch (MER) cut its rating on the stocks to neutral from buy, citing the impact of debt market exposure.

The broker said Bear Stearns and Lehman are dependent on the debt markets to a larger extent than other firms. Consequently, earnings are likely to suffer from a slowdown in securitization and mortgage business. Merrill cut its 2008 profit outlook for Lehman by 22% and for Bear Stearns by 16%. The broker cut its earnings forecast for Citigroup by 5% only as the group''s broader business mix is expected to soften the earnings shortfall.

Among other pre-market highlights, State Street (STT) fell 2.8% on a report it has exposure to $22 billion of asset-backed commercial paper conduits, the highest exposure to conduits of any European or American bank.

In merger-and-acquisitions news, PolyMedica (PLMD) climbed 14% after MedcoHealth Solutions (MSH) agreed to buy it in a $1.5 billion all-cash deal. Companies expected to release quarterly earnings included Borders (BGP) and Corinthian Colleges (COCO). S&P 500 futures fell 6.7 points at 1,463.10 and Nasdaq 100 futures declined 7.5 points at 1,943.00. Dow industrials futures fell 60 points.


8:00AM MedcoHealth Solutions agreed to buy PolyMedica for $1.5.