Published May 23, 2012
FOX Business: The Power to Prosper
U.S. stock-index futures followed European shares to the downside on Wednesday amid skepticism that eurozone leaders meeting on the day will take the measures necessary to protect the currency bloc from its deepening debt crisis.
As of 9:15 a.m. ET, Dow Jones Industrial Average futures slid 73 points to 12404, S&P 500 futures dipped 7.6 points to 1307 and Nasdaq 100 futures dropped 14 points to 2521.
Market participants across the globe have worried about the growing chances that Greece may be forced to exit the eurozone in a move that would send shockwaves across markets there. On Tuesday afternoon, former Prime Minister Lucas Papademos was reported to have said the country is making preparations for a possible exit. The comments ended a modest rally in U.S. markets and set the stage for a weak European open. Papademos later backtracked, saying preparations weren't in fact underway, according to Dow Jones Newswires.
On top of that, German officials once again voiced their lack of support for the idea of eurobonds, which other countries, like France, have supported as a way to help ease the crisis. Germany's approval would be necessary for the common issuance to succeed because they would rely on the country's strong economy and debt rating for backing.
Traders said that they would be watching the informal eurozone summit slated for later in the day in Brussels for possible clues on actions leaders may take. However, expectations were fairly dim for any concrete conclusions to be drawn before the formal summit next month.
The Euro Stoxx 50, which tracks eurozone blue chips, tumbled 2.1%. Exchanges in Germany, France, Spain and other European nations sustained similarly heavy selling.
Wall Street will also get a look at how sales of new homes fared in the U.S. last month. Economists expect sales to have edged higher to an annualized rate of 335,000 from 328,000. A report on sales of previously-occupied homes released on Tuesday showed sales at the highest rate in nearly two years last month. The market for homes has been sluggish since the financial crisis as lending conditions have remained tight and demand has been stubbornly tepid.
Oil prices continued sliding on the day as nuclear talks between major Western powers and Iran were considered to be going in a positive direction. Crude traded in New York dipped 80 cents, or 0.87%, to $91.03 a barrel. Wholesale New York Harbor gasoline fell 0.6% to $2.92 a gallon.
Traders will also get the Energy Department's weekly inventory report on the day, which often moves markets. Analysts are looking for an oil build of 500,000 barrels, and a gasoline draw of 700,000 barrels.
In metals, gold tumbled $18.80, or 1.2%, to $1,558 a troy ounce. U.S. Treasury yields fell as traders bid up the safe-haven asset. The yield on the 10-year dropped 0.027-percentage point to 1.743%.
On the corporate front, Hewlett-Packard (HPQ) is set to report its quarterly earnings after the closing bell. Economists expect the blue-chip technology company to have earned 91 cents a share.
The Euro Stoxx 50 tumbled 2.1%, the English FTSE 100 fell 1.8% to 5308 and the German DAX shed 1.7% to 6330.
In Asia, the Japanese Nikkei 225 sold off by 2% to 8557 and the Chinese Hang Seng slid 1.3% to 18786.