STILL GOING DOWN?

U.S. stocks headed for another day of declines Wednesday as fears about a global credit squeeze overshadowed U.S. data showing the slowest consumer price inflation growth in eight months.

"The best case scenario is we don't get any headlines regarding the subprime mess, and maybe we can weather the storm," said Peter Cardillo, chief market economist at Avalon Partners.

"But the [consumer prices] numbers are not serving as the cushion we had expected, at least in the early going."

Futures for the Dow Jones Industrial Average (DJI) were down 49 points at 13, 040, while those for the S&P 500 (SPX) fell 5.6 points to 1,428.

Nasdaq100 futures dropped 10 points to 1,904.

More credit woes

Stocks slid on Tuesday, with the Dow falling more than 200 points, amid further signs that trouble in the subprime mortgage market is prompting a tightening of credit.

Wednesday marks a key deadline for some investors because of a 45-day redemption notice period at several hedge funds.

Those, including some run by Goldman Sachs (GS) , are nursing heavy losses, and investors would have to make withdrawal requests by mid-week to get cash by the end of the third quarter. Other hedge funds have lock-up periods running as long as three years.

Japanese banks including Mitsubishi UFJ reported losses from subprime exposure on Wednesday, while the Financial Times reported Bank of America (BAC) and Countrywide Financial (CFC) have refused to lend money when hedge funds use mortgages, collateralized debt obligations and subprime securities as collateral.

Countrywide also was cut to sell from buy at Merrill Lynch, with the broker citing concerns about liquidity in the mortgage sector. In pre-open trade, Countrywide dropped 6%.

Tame inflation

The Labor Department reported a 0.1% July rise in the Consumer Price Index - a measure of price inflation on food energy and consumer products.

The Federal Reserve monitors the data for signs of rising inflation, the Fed's largest worry. The core consumer price, which excludes volatile food and energy prices, increased 0.2% for the second straight month.

Both the headline and the core reading were in line with economists expectations.

Manufacturing activity in the New York area continued at a healthy pace in August, the New York Federal Reserve Bank said.

The bank's Empire State Manufacturing index inched lower to 25.1 in August from 26.5 in July. Economists were expecting the index to fall to 19.0.

There's also the NAHB housing market index, July industrial production and Treasury inflow data due for release.

Movers

Goldman cut drinks and snacks giant PepsiCo (PEP) to neutral from buy, citing valuation. The broker told clients it sees stronger potential upside for Molson Coors Brewing (TAP.NV.T) , which it separately upgraded to buy.

H.J. Heinz Co. (HNZ) said it expects to report fiscal first-quarter sales growth of about 9% and earnings per share of 62 cents to 63 cents. Analysts, on average, expect the food company to earn 55 cents a share for the quarter.

Deer & Co.'s (DE) fiscal third-quarter earnings rose 23%, with the agricultural equipment maker reporting earnings for the quarter of $537.2 million, or $2.37 a share, compared with $436 million, or $1.85 a share, a year earlier.

Other markets

In early trade on the New York Mercantile Exchange, gold futures fell, with the contract for December delivery falling $4.90 at $674.80 on ounce.

The dollar gained against its European rivals, but continued to lose ground against the yen, The greenback fell 0.6% against the yen at 116.83 yen. The euro was down 0.4% at $1.3472.