Stocks were poised to open higher Tuesday as investors anticipated a massive interest rate cut from the Federal Reserve just two days after the central bank backed JPMorgan's buy of Bear Stearns and also loosened up its lending.
In the meantime, investors will be hearing from two rivals of Bear Stearns Cos. -- Lehman Brothers Inc. and Goldman Sachs Group Inc. -- which are scheduled to release their fiscal first-quarter earnings Tuesday morning. Both are expected to post profits, but profits that are significantly lower than they were a year ago. Investors will want to get more details about the souring mortgage-backed bets on their books.
Stockholders have been especially pessimistic about Lehman Brothers, as it is the investment bank most similar in structure and exposure to Bear Stearns. Lehman shares fell 19 percent on Monday after JPMorgan Chase & Co. said Sunday it was buying Bear Stearns for just $2 a share, or $236 million.
The Fed on Sunday, in addition to guaranteeing up to $30 billion of Bear's most troubled assets for JPMorgan, lowered its discount rate -- the rate it charges banks directly -- by a quarter-point. It also is allowing more types of financial firms to borrow from the central bank, and is accepting more various types of collateral.
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