NEW YORK (TheStreet) -- Stock futures were signaling a weaker open on Wall Street Tuesday as they followed international markets lower amid heightened uncertainties about the eurozone.
"Concerns over Spain and the rest of the eurozone come back to the forefront now that the U.S. has answered questions on QE3," said a Cantor Fitzgerald client note.
A gloomy assessment of the global economy by package delivery giant FedEx (FDX) in its quarterly report also wasn't helping sentiment.
Futures for the Dow Jones Industrial Average were declining 18 points, or 23.10 points below fair value, to 13,452. Futures for the S&P 500 were down 1.7 points, or 2.04 points below fair value, at 1452. Futures for the Nasdaq were falling 1.5 points, or 4.84 points below fair value, at 2845.In recent sessions, both Spanish and Italian bond yields have been on the rise, reflecting worries that both countries will eventually have to ask for official bailouts. Meanwhile, some media reports indicate that the Spanish government is getting ready to seek a rescue facility, likely subsequent to regional elections in Galicia and the Basque country on Oct. 21. The international markets were trading in the red on Tuesday. The FTSE in London fell 0.58% and the DAX in Germany off 0.63% as "European markets move lower as auto sales in the region were weaker than expected and the eurozone holds their breath ahead of the Spanish bank stress test results 9/28," the Cantor Fitzgerald report explained. "Early losses were pared a bit following a better than expected Spanish bond auction this morning." In Germany, the closely followed ZEW Economic Sentiment Survey increased 7.3 points to -18.2 points in September, the indicator's first increase after four declines in a row, as the ECB's bond buying announcement may have provided a lift, according to the Centre for European Economic Research. However, the negative value of the indicator shows that financial market experts still expect the German economy to lose momentum over the next six months, according to the report. Hong Kong's Hang Seng index closed down 0.27% and the Nikkei in Japan finished lower by 0.39% as anti-Japan protests escalated in China, leading more Japanese firms to halt their manufacturing operations in the country. The major U.S. equity averages finished lower Monday as the euphoria about the Federal Reserve's bold QE3 stimulus plan began to wear off. Worries about the eurozone also soured investor sentiment as European Union leaders made little progress during weekend meetings to discuss the details of addressing the region's sovereign debt problems. Before Tuesday's open, the Commerce Department reported that the U.S. current account deficit narrow to $117.4 billion in the second quarter from a downwardly revised $133.6 billion in the first quarter. Economists expected the deficit to shrink to $126.8 billion. The National Association of Home Builders will release a read on its housing market index at 10 a.m., with economists expecting a rise to 38 from 37. The benchmark 10-year Treasury was rising 12/32, diluting the yield to 1.805%. The greenback was up 0.13%, according to the dollar index. Leo Kelly, managing director and partner at HighTower, said that he and his team are beginning to reduce equities modestly, after increasing equity holdings and reducing an overweight cash position during the recent volatility, with the markets now having moved so quickly on the anticipation of and execution of QE3. "We have also shifted some of our equity allocation to a hedged position on the S&P 500 with significant downside protection," said Kelly. "We still favor equity for the long term and see opportunity in sectors such as energy, technology and healthcare. That said, we are concerned with the potential for volatility over the next several months when the euphoria of Bernanke 3 wears off. After all, the Fed would not engage in such an action if it were not very concerned about the economic landscape." Kelly said he and his team would use any volatility to increase equity holdings in areas they believe will perform well over the next several years. "We are also interested in valuations in Europe. The dichotomy of attractive valuations of companies with solid fundamentals, sound business models that are geographically diversified and strong balance sheets makes the area attractive. Timing of entry in such a potentially volatile market is always a concern. Again, we will look for volatility to add to the market directly and are actively pursuing a hedged European equity holding," Kelly added. "We are significantly underweight" in Treasuries, Kelly said. "Over the last several months we have reduced the average duration of our portfolios," he said. "We are very concerned with interest rate risk. QE3 is yet another injection of liquidity into a market awash in liquidity. Eventually, rates must move higher, we want to be prepared. High quality municipal bonds, high quality corporates, floating rate bank loans and emerging market bonds are areas we are currently investing in." October crude oil futures were slipping 43 cents to $96.19 a barrel and December gold futures were off $11.90 at $1,758.70 an ounce. In corporate news, FedEx lowered its full-year earnings outlook to between $6.20 and $6.60 a share, down from its prior estimate of $6.90 to $7.40 a share, as the company continues to feel the pain of the sluggish global economy. The company estimates earnings of $1.30 to $1.45 a share in the current quarter, down from $1.57 a share a year earlier. FedEx posted fiscal first-quarter earnings of $1.45 a share versus the $1.40 predicted by Wall Street. "Earnings for the first quarter were below our expectations as weak global economic conditions dampened revenue growth, drove a shift by our customers to our deferred services and outpaced our near-term ability to reduce FedEx Express operating costs to match demand levels," Alan Graf, the company's chief financial officer, said in a press release. AMD (AMD) announced the abrupt resignation of its chief financial officer, Thomas Seifert. The No. 2 chip maker behind Intel (INTC) said Monday that Seifert, who joined AMD in 2009 and served as interim CEO in 2011, is leaving to pursue other opportunities. Apple (AAPL) saw its shares top $700 for the first time ever in extended trading on Monday. The stock hit a new high of $701.79 after the bell following Apple's announcement earlier in the day that it sold more than 2 million units of the iPhone 5 during its first 24 hours of pre-orders. Dole Food (DOLE) said Tuesday it agreed to sell its worldwide packaged foods and Asia fresh produce businesses for $1.7 billion toItochu, the Japanese trading house.
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