U.S. stock futures indicate a lower open Tuesday, as investors mulled the futures of American International Group and Washington Mutual, a steep drop in profit at Goldman Sachs, and the possibility of a Federal Reserve interest-rate cut.

In today’s earnings, U.S. investment bank Goldman Sachs said third-quarter profit slid 70% from a year ago as results at several units plummeted during ongoing market turmoil.

The company, one of two remaining major independent investment banks in the U.S., said it earned US$845 million, or US$1.81 a share in the quarter, compared to US$2.09 billion, or US$4.58 a share a year ago.

Rival Morgan Stanley reports it Q3 results on Wednesday.

In other financial sector news after the UK’s Barclays confirmed it is in talks to purchase Lehman’s broker-dealer operations.

Investors have been growing increasingly concerned about the futures of AIG and Washington Mutual after both suffered brokerage downgrades after the markets closed Monday.

Amid the gloom, the U.S. Federal Open Market Committee is meeting today, with markets now expecting a quarter-point rate cut. The Fed decision is due at 14:15 ET.

In one piece of good news, U.S. consumer prices fell last month for the first time in nearly two years reflecting a rapid drop in oil prices.

The consumer price index fell 0.1% in August, the U.S. Labour Department said today, reversing a fraction of the previous month’s 0.8% rise. Excluding food and energy, the CPI advanced 0.2%. The figures were in line with Wall Street forecasts.

Consumer prices rose 5.4% on a year-over-year basis, down slightly from a 17-year high of 5.6% in July. The core CPI grew a more modest 2.5% compared to August 2007, though that’s still well above the Fed’s long-term goal of 1.5% to 2%.

Here at home, manufacturing sales continued their broadly based advance in July, gaining 2.7% for a fourth consecutive monthly increase. Sales were pushed higher mainly by increased volumes, Statistics Canada said.

The Canadian dollar opened at US93.14¢, down 0.50 cent from Monday.

On the commodities front oil prices tumbled Tuesday morning, falling briefly below US$92 a barrel to reflect market fears that the U.S. credit crisis will drag on global economic growth and restrain demand for crude.

In other earnings news, computer maker Dell warned that it sees a “further softening” in global demand in the current quarter.

Overseas markets continued falling sharply. Japan’s Nikkei stock average lost almost 5% and Hong Kong’s Hang Seng index closed with a drop of 5.4% after being closed Monday.

European bourses continued sliding. The UK’s FTSE 100 was down 3%t early in the afternoon in London, while Germany’s DAX lost 1.9% and the Paris CAC-40 fell 2%.

On Monday, bad news from the U.S. financial sector resulted in a rough start for markets in Canada and abroad on Monday, and things continued to slide throughout the day.

As news spread that Lehman Brothers Holdings Inc. filed for bankruptcy protection, and that Merrill Lynch & Co. would be bought by Bank of America, the S&P 500 suffered its steepest drop since the first day of trading following the September 2001 terrorist attacks.

In New York, the S&P 500 fell 57.89 points, or 4.6%, to 1,192.70, while the Dow Jones industrial average plummeted 504.48 points, or 4.4%, to 10,917.51. tech-heavy Nasdaq Composite dropped 81.36 points, 3.6%, to 2,179.91.

North of the border, markets didn’t fare much better. The S&P/TSX composite index fell 515.55 points, or 4.04% to 12,254.03. The junior S&P/TSX Venture composite index fell 4.52% to 1,534.81.

IE