Wall Street Takes a Breather As Euro Glee Fades
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Stock-index futures were solidly to the downside on Friday as market participants considered how European policymakers would execute a wide-ranging plan to stem the sovereign debt crisis that sent the markets soaring in the prior session.
Today's Markets
As of 9:00 a.m. ET, Dow Jones Industrial Average futures fell 51 points to 12,115, S&P 500 futures slipped 7.5 points to 1,275 and Nasdaq 100 futures fell 10.5 points to 2,383.
The markets are headed for their best October performance on record, as easing European tensions, and generally upbeat corporate earnings have boosted traders' confidence. Indeed, Thursday's rally knocked most major market indices into the black for 2011. The Dow, S&P, and Nasdaq are all trading at their highest level in three months.
All eyes are still fixed on Europe, however, even after policymakers Thursday crafted a plan to tackle the region's debt crisis that has threatened some of the world's biggest economies. Doubts still remain among analysts as to whether the euro zone's $610 billion rescue fund, even after substantial leveraging, will be enough to tackle future sovereign debt crises, particularly if they strike big economic players, like Italy.
The currency bloc is hoping China may make an investment in the fund, taking advantage of its strong position in currency markets. However, European and Chinese leaders downplayed that notion on Friday, according to several media reports from Asia and Europe.
Additionally, Spiegel, a major German newspaper, reported that German courts filed a temporary injunction limiting the country's parliament from quickly releasing funds for the rescue fund, potentially presenting another setback.
The euro fell 0.09% to $1.417 while European blue chips edged slightly lower.
Traders also have a slew of corporate and economic news on the domestic front to parse through.
Pharmaceutical giant Merck (NYSE:MRK) posted third-quarter profits of 94 cents a share, excluding one-time charges, on revenue of $12 billion, topping estimates on the top and bottom line. Whirlpool (NYSE:WHR) said it plans on slicing more than 5,000 jobs, which equates to roughly 10% of its workforce, as it has seen its sales grow more slowly than expected. The world's largest appliance maker also trimmed its full-year earnings forecast.
Hewlett-Packard (NYSE:HPQ) revealed plans to keep its personal computer business after announcing in August that it would spin the business off in a move that was panned by shareholders.
On the economic front, U.S. personal spending rose 0.6% in September from August, in line with estimates, while personal income rose 0.1%, short of estimates of 0.3%. A separate report is anticipated to show consumer sentiment ticked modestly higher in late October as the European debt crisis and market turmoil continued fading.
Analysts will be paying close attention to the state of consumers as the key holiday shopping season draws near. Retailers, such as Best Buy (NYSE:BBY), may be particularly swayed by these reports. These data come on the heels of a report showing the economy grew at the fastest pace in a year in the third quarter of 2011.
Energy futures were in the red following strong gains in the prior session. Light, sweet crude fell $1.83, or 1.9%, to $92.16 a barrel. Wholesale RBOB gasoline slipped 3 cents, or 0.98%, to $2.72 a gallon.
In metals, gold fell $8.90, or 0.51%, to $1,739 a troy ounce. Yields on government debt moved lower. The benchmark 10-year note yielded 2.382% from 2.402%.
Foreign Markets
European blue chips fell 0.18%, the English FTSE 100 dipped 0.2% to 5,703 and the German DAX rose 0.29% to 6,356.
In Asia, the Japanese Nikkei 225 jumped 1.4% to 9,050 and the Chinese Hang Seng soared 1.7% to 20,019.