Stock Futures Fall on Eurozone, Fiscal Cliff Concerns
NEW YORK (TheStreet) -- Stock futures were dropping Tuesday as eurozone and fiscal cliff jitters weighed on investor sentiment.
Futures for the Dow Jones Industrial Average were falling 52 points, or 36.16 points below fair value, at 12,728. Futures for the S&P 500 were down 6.99 points, or 4.99 points below fair value, at 1371. Futures for the Nasdaq were declining 16.25 points, or 14.17 points below fair value, at 2564.
The major U.S. stock averages finished flat Monday with investors mostly sticking to the sidelines after last week's big pullback following the U.S. presidential election.
The sideways trading came as upbeat trade data from China and a modest dose of M&A action was set against uncertainty about Greece's next round of bailout funds and budget talks coming up between Democratic and Republican congressional leaders.U.S. lawmakers now have seven weeks to strike a deal to avoid the fiscal cliff -- a set of automatic federal tax increases and spending cuts set to occur in January -- a situation that could lead the country back into a recession. Still "in the near term, the U.S. economy faces significant downside risks from the intensification of the fiscal restraint that is likely to occur even if policymakers resolve most of the 'fiscal cliff,'" warned Jan Hatzius, chief economist at Goldman Sachs. "Under our baseline estimate for the shape of a fiscal agreement -- which involves an end to the payroll tax cut, an end to the upper-income Bush tax cuts, and various smaller forms of restraint -- fiscal policy at the federal, state, and local level will subtract around 1-3/4 percentage points from real GDP growth in the first half of 2013, roughly 1 percentage point more than in 2012." Meanwhile, a meeting of eurozone finance ministers concluded without any concrete decisions on whether and when to unlock the next tranche of bailout money for Greece, though there was an agreement to give Greece two more years to fix its deficit. "The meeting of finance ministers on Monday concluded in disarray on Monday while at the later press conference Mr. [European Commissioner for Economic and Monetary Affairs Olli]Rehn said Greece would be given two more years to get its deficit down to an agreed ratio to GDP, while Ms. [International Monetary Fund Chief Christine] Lagarde stated it would have to be 2020," noted Andrew Wilkinson, chief economist strategist at Miller Tabak. "The difference in two years reminds us somewhat of the difference between 35-and 39.6% marginal tax rates for U.S. higher income earners and yet again the difference of judgment is causing investor angst on Tuesday morning." The U.S. calendar of major economic releases is relatively light Tuesday. The International Council of Shopping Centers/Goldman Sachs report, released before the markets opened, showed same-store sales increasing 0.7% in the week ended Nov. 10 driven by restocking in the Northeast after Hurricane Sandy. Sales rose at a soft rate of 1.8% year over year. Federal Reserve Vice Chair Janet Yellen is scheduled to speak to University of California Berkeley's Haas School of Business on "Central Bank Communications" at 3:30 p.m. The FTSE 100 in London was lower by 0.54%, while the DAX in Germany was down 0.80% on Tuesday. Japan's Nikkei average settled down 0.18% and Hong Kong's Hang Seng closed lower by 1.13%. The ZEW German economic-expectations index showed a decline in November versus the forecasts for an improvement. Gold for December delivery was sliding $3.30 to $1,727.60 an ounce at the Comex division of the New York Mercantile Exchange, while December crude oil contracts were down 47 cents at $85.10. The benchmark 10-year Treasury was unchanged, with the yield at 1.594%. The dollar was up 0.14%, according to the U.S. dollar index. In corporate news, Dick's Sporting Goods (DKS) shares were jumping 4% in premarket trading Tuesday after the company announced better-than-expected third-quarter earnings. Same-store sales grew 5.1%. Investor Carl Icahn hiked his stake in videogame developer Take-Two Interactive (TTWO) to 11.69%. Michael Kors (KORS) shares were slumping by nearly 5% even after the luxury goods maker reported better-than-expected quarterly results and lifted its full-year earnings projection, and reported strength in its flagship brand. Microsoft's (MSFT) Steven Sinofsky, president of Windows and Windows Live, is leaving the software giant. The company didn't provide a reason for Sinofsky's departure, which comes just weeks after Microsoft launched Windows 8. Shares were tumbling more than 3.5%. Home Depot (HD) on Tuesday posted third-quarter results that beat Wall Street forecasts and hiked its full-year guidance as the home-improvement retailer got a boost from the gradually improving U.S. housing market conditions. Home Depot raised its full-year outlook to sales growth of 5.2% and earnings of $3.03 a share after posting quarterly earnings of 74 cents a share on revenue of $18.13 billion, versus the average analyst expectation of earnings of 70 cents a share on revenue of $17.92 billion. Shares were spiking by more than 2%. Cisco (CSCO), the networking giant, is expected by Wall Street to post fiscal first-quarter profit of 46 cents a share on revenue of $11.78 billion. Shares of Cisco, which reports after the markets close Tuesday, have declined more than 10% in the past year. The stock was trading sideways in premarket action. Yahoo! (YHOO) is preparing to launch a major overhaul of Yahoo Mail, which sources told AllThingsD said has a cleaner, "more Gmail-like" look. Citing sources, AllThingsD said the overhaul has been initiated by new CEO Marissa Mayer and is being made to better compete with the fast-growing mail offering from Google. Shares were down 0.17%. -- Written by Andrea Tse in New York.
>To contact the writer of this article, click here: Andrea Tse. Follow @Commodity_Bull
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