NEW YORK (TheStreet) -- Stock futures were pointing to sharply lower open on Wall Street Wednesday as investors feared for the future of the eurozone.
Adding to worries was the Congressional Budget Office's warning that the U.S. economy could fall into a recession if steep tax increases and scheduled government spending reductions were to go into effect in January.
Futures for the
Dow Jones Industrial Average
were falling 99 points, or 104.8 points below fair value, at 12,378. Futures for the
were down 11.4 points, or 11.4 points below fair value, at 1303. Futures for the
were falling 21.5 points, or 24.3 points below fair value, at 2514.
Wall Street finished on a mixed note Tuesday as concerns about Greece's potential exit from the eurozone resurfaced in the final hour of trading. Late in the day, former Greek Prime Minister Lucas Papademos was quoted as saying the country was considering preparations for a potential exit from the single-currency bloc.
European leaders were set to meet Wednesday at an informal dinner in Brussels -- their 18th gathering there in the past two years -- to discuss ways to soften austerity measures that are causing political turmoil in Greece and other weaker European nations. They will also discuss other controversial policies including the creation of eurozone bonds, which has been stiffly resisted by Germany.
Specific items for discussion on the agenda, according to a Societe Generale note, are a €10 billion increase in capital for the European Investment Bank for infrastructure projects; making greater, proactive use of European Union structural funds to aid development in poorer countries; and finally introducing commonly backed "project bonds" to fund pan-European infrastructure projects.
"It is this final proposal that is proving the most controversial, with France in particular pushing project bonds as a sort of Trojan horse that may potentially end up being a stepping stone on the way to common European government financing achieved through full Eurobonds," Societe Generale analysts said.
London's FTSE was falling 1.9%, and the DAX in Germany shedding 1.7%.
On Wednesday, Germany managed to sell €4.56 billion ($5.8 billion) of new two-year bonds with a 0% coupon and average yield of just 0.07%, highlighting the anxiety among investors about a Greek eurozone exit and their strengthened desire for safe-haven assets.
The Hang Seng Index in Hong Kong settled down 1.3% and Japan's Nikkei average closed down 2%.
The U.S. economic calendar for Wednesday include the Federal Housing Finance Agency's housing price index for March and new home sales from the Department of Commerce at 10 a.m. EDT.
Economists surveyed by
forecast that new single-family home sales rose to a seasonally adjusted 335,000-unit annual rate in April, from 328,000 in March.
The Congressional Budget Office warned that the U.S. economy could slip into a recession in the first half of 2013 as the nation heads towards a "fiscal cliff" in January that could suck more than $500 billion from the economy in 2013.
The benchmark 10-year Treasury was rising 10/32, lowering the yield to 1.737%. The greenback was rising 0.3%, according to the
The July crude oil contract was down 91 cents at $90.94 a barrel. June gold futures were down $20.80 to $1,555.80 an ounce.
2012 Stock Predictions and Outlook
In corporate news,
, the computer and printer maker, reports earnings after Wednesday's closing bell and an announcement could be made on a restructuring plan that may include the elimination of as many as 30,000 jobs.
Analysts expect HP to report fiscal second-quarter earnings of 91 cents a share on revenue of $29.92 billion.
fell short of analysts' expectations on both the top and bottom lines in its
. Dell also provided second-quarter revenue guidance below analysts' views. Dell predicts revenue of between $14.69 billion and $15 billion; analysts are looking for sales of $15.42 billion.
Shares of Dell dropped 12.8% in premarket trading Wednesday.
, the homebuilder, posted second-quarter profit of 10 cents a share, a swing from a year-earlier loss of 12 cents. The latest quarter included a tax benefit of $1.2 million. Revenue rose to $373.7 million from $319.7 million. Analysts expected Toll to report earnings of 3 cents a share on revenue of $381 million.
Toll Brothers shares ticked up a penny, or 0.04%, in premarket trading.
, the German IT services giant, said Tuesday it reached an
for $4.3 billion. SAP's offer of $45 a share offer represents a 20% premium to Ariba's closing price on Monday. The deal is expected to close in the third quarter.
-- Written by Andrea Tse in New York.
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