FOX Business: The Power to Prosper
Data pointing to an economic slowdown in China and across Europe, combined with Fitch's warning that a Greek default is still likely despite a bailout deal from the EU, weighed on U.S. equity futures on Wednesday.
As of 8:00 a.m. ET, Dow Jones Industrial Average futures fell 7 points to 12938, S&P 500 futures dipped 1.3 points to 1359 and Nasdaq 100 futures rose 0.5 point to 2592.
The Dow has been pulling back from the 13000 level since briefly touching it for the first time in nearly four years on Tuesday afternoon. While the economic calendar in the U.S. is fairly light on the day, there were a slew of significant global reports.
China's manufacturing sector likely contracted for the fourth-straight month in February, according to the HSBC Purchasing Managers’ Index. That means that the world's second-biggest economy "remains on track for a slowdown," Hongbin Qu, the company's co-head of Asian economic research wrote in a note accompanying the report.
A fresh read on manufacturing in the eurozone proved to be equally disappointing. Markit's purchasing manager's index for the 17-member currency bloc fell to 49.7 in February from 50.4 in January. Meanwhile, Germany, the region's economic engine, saw its PMI fall to 50.1 from 51. Readings above 50 point to expansion, while those below indicate contraction.
The data "confirmed our view that the euro area is likely to see another contraction" in the first quarter, analysts at Nomura wrote in a note to clients following the report. "The headwinds from fiscal tightening and the sovereign debt crisis will continue to weigh on the near-term outlook."
The debt situation in Greece that appeared to be under control after European Union leaders approved a second bailout package for the country began unraveling to some extent on Wednesday. Fitch slashed the country's credit rating to "C" from "CCC," warning a default is "highly likely" in the near term.
The ratings company said that an exchange by private creditors of Greek bonds for new paper with a lower face value, a key component of the rescue package, "will, if completed, constitute a rating default." The other major ratings companies haven't weighed in yet on whether the exchange is tantamount to a default, meaning it remains unclear if insurance policies protecting against a default will be triggered. This has been cited by analysts as a major risk to European banks that write these policies.
On the U.S. front, traders will get a look at how the market for existing homes fared in January at 10:00 a.m. ET. Economists expect sales to have increased to an annualized rate of 4.65 million units from 4.61 million the month prior. The real estate market has continued to struggle as prices and demand have remained subdued. Economists have pointed to this a major sticking point for the broader economy.
Commodities markets were mixed after rallying in the prior session. The benchmark crude oil contract traded in New York fell 15 cents, or 0.16%, to $106.08 a barrel. Oil futures hit their highest level since May on Tuesday as tensions have heated up between Iran and Western countries.
Wholesale RBOB gasoline slipped 0.2% to $3.06 a gallon. In metals, gold fell 70 cents, or 0.05%, to $1,758 a troy ounce.
Treasury yields fell slightly as traders bid up the asset. The benchmark 10-year note yields 2.059% from 2.066%.
European blue chips fell 0.72%, the English FTSE 100 slipped 0.36% to 5907 and the German DAX dipped 0.82% to 6851.
In Asia, the Japanese Nikkei 225 rallied 0.96% to 9554 and the Chinese Hang Seng rose 0.33% to 21549.