* Freddie Mac posts loss, to slash dividend
* Oil below $120/bbl, U.S. weekly data on tap
* Cisco optimism may limit pressure on techs
(Updates prices)
By Ellis Mnyandu
NEW YORK, Aug 6 (Reuters) - U.S. stocks headed for a lower
open on Wednesday after home finance company Freddie Mac
<FRE.N> posted its fourth straight quarterly loss and braced
for more fallout from the U.S. housing slump.
The news from Freddie Mac dealt investors a blow a day
after Wall Street had its biggest one day advance in four
months. Shares of Freddie Mac fell 19 percent before the bell
while its bigger rival, Fannie Mae <FNM.N>, slid 15 percent.
The two home finance companies, known as government-sponsored
enterprises, have been pummeled by the housing downturn.
Some investors, doubting stocks will sustain gains, could
book profits after Tuesday's broad surge, the biggest in four
months on a drop in oil to three-month lows and hints from the
Federal Reserve it will be in no rush to raise interest rates.
"I think we're probably headed for some sort of a
pullback," said Peter Cardillo, chief market economist at
Avalon Partners in New York.
"We know that the situation in the credit markets is still
very much precarious and that we're probably going to see more
negative news coming out of there, but there's a feeling that a
lot of the financial institutions are not going to go belly
up."
S&P 500 futures <SPc1> fell 2.90 points and were below fair
value, a formula that evaluates pricing taking into account
interest rates, dividends and time to expiration on the
contract.
Dow Jones industrial average futures <DJc1> were off 47
points, but Nasdaq 100 <NDc1> futures rose 4 points.
U.S. crude oil prices edged lower, slipping 12 cents to
$119.07 a barrel. Weekly U.S. oil inventory data is due at
10:35 a.m. (1435 GMT).
Freddie Mac also doubled its reserves for losses on
delinquent loans and home foreclosures. Shares of Freddie Mac
fell to $6.50 before the bell after it reported an $821 million
loss and announced a plan to slash its dividend. For details,
see []. Fannie's stock fell to $11.57 before the
bell.
Last month fears that the two companies, critical players
in the U.S. housing market, faced capital constraints roiled
markets and resulted in a sweeping rescue effort by Washington
to bolster their finances.
Even so, optimism fueled by Cisco Systems Inc's <CSCO.O>
comments that the network equipment maker expected the weak
economic environment to be relatively short term could offset
any downside pressure on the technology front. []
Cisco shares were up 5.4 percent at $23.87 before the
bell.
According to Thomson Reuters chart data, the benchmark S&P
500 <.SPX> will start Wednesday's trading at its most
overbought in two months, according to its 14-day relative
strength index.
(Editing by Kenneth Barry)
