* Bank nationalization fear grips markets
* Bank of America, Citigroup drop before the bell
* Futures fall: S&P 500 17 points, Nasdaq 20.50, Dow 155
* For up-to-the-minute market news, click []
(Recasts first paragraph, updates prices)
By Ellis Mnyandu
NEW YORK, Feb 20 (Reuters) - U.S. stocks headed for a drop
at Friday's opening that would extend a rout which has pulled
the Dow Jones industrials to a fresh bear-market low, as
worries about the fate of major banks escalated.
Fears that the U.S. government's bank rescue plan might
involve nationalization and that the recession is worsening had
investors scurrying toward the relative safety of U.S.
government bonds as stocks plummeted in Europe and Asia.
The Dow industrials <> slid to their lowest close in
more than six years on Thursday after hitting a fresh intraday
bear-market low.
That breach has investors fretting about the likelihood
that the benchmark S&P 500 <.SPX> could also break through its
November lows as the gloom persists and retest levels not seen
since 1997.
"There's a lack of confidence in the government to get us
out of this and that has people sitting on their hands and not
willing to buy," said Matt McCall, president of Penn Financial
Group in Ridgewood, New Jersey. "There's that fear that we
nationalize banks and this market gets killed."
Before the bell shares of Bank of America <BAC.N> were down
7.1 percent at $3.65, while Citigroup <C.N> declined more than
12 percent to $2.20, and Wells Fargo <WFC.N> shed 5.3 percent
to $11.38. Year-to-date these stocks are off 72 percent, 62
percent and 59 percent, respectively.
News that New York Attorney General Andrew Cuomo has
subpoenaed Bank of America Chairman and Chief Executive Kenneth
Lewis over whether the bank withheld information from investors
in its purchase of Merrill Lynch may also hurt sentiment.
The Wall Street Journal reported that Lewis was subpoenaed
last week. For details see [].
S&P 500 futures <SPc1> fell 17 points, and were below fair
value, a formula that evaluates pricing by taking into account
interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures <DJc1> dropped
155 points, and Nasdaq 100 <NDc1> futures declined 20.50
points.
Lowe's Companies <LOW.N> reported a sharp drop in quarterly
profit as recession-hit consumers spent less on their homes.
[]
Shares of the second-largest home improvement retailer fell
4.3 percent to $16.25 in premarket trading after the results.
After several near misses, the Dow Jones industrial average
<> this week broke through the low it set in November,
taking losses since the record closing high of October 2007 to
46.8 percent.
The backdrop for the latest damage in the market is the
failure last week by U.S. Treasury Secretary Timothy Geithner
to restore confidence in the financial system when he unveiled
a financial sector rescue plan that fueled uncertainty about
how banks would be relieved of toxic assets on their books.
There are also concerns that the $787 billion economic
stimulus signed into law by U.S. President Barack Obama this
week might not blunt the impact of the recession soon enough.
Year-to-date, the S&P 500 is down more than 13 percent,
while the Dow has lost about 15 percent.
(Editing by James Dalgleish)
