Stock Futures Fall on Eurozone Recession Fears


NEW YORK (TheStreet) -- U.S. stock futures pointed to a lower open Tuesday as investors were anxious about a slowing global economy following more evidence that the European economy is sliding deeper into the doldrums.

Futures for the Dow Jones Industrial Average were dropping 87 points, or 74.8 points below fair value, at 12,874. Futures for the S&P 500 were down 10.7 points, or 9.6 points below fair value, at 1354, and futures for the Nasdaq were behind by 18.8 points, or 17.6 points below fair value, at 2597.

U.S. stocks edged lower Monday after China said it would see slower growth this year. As for the eurozone, Markit Economics said that its composite purchasing managers' index for the continent fell in February. Both sets of data overrode better-than-expected U.S. factory orders and non-manufacturing activity reports.

The European Union's statistics office confirmed Tuesday a previous report that Europe's economy shrank in the fourth quarter as investments pulled back by the most in three years and exports and consumer spending declined. The EU report said that the continent's gross domestic product contracted 0.3% from the third quarter. Exports dipped 0.4% after a 1.4% increase in the preceding quarter. Household spending fell 0.4% and investment declined 0.7%.

Meanwhile, the euro was approaching a three-week low on concerns that Greece won't be able to complete its big restructuring deal.

London's FTSE was falling 0.99%, and Germany's DAX was declining 1.5%. In Asia, Japan's Nikkei Average finished lower by 0.6%, while Hong Kong's Hang Seng index closed down 2.2%.

Appetite for risk assets is likely to be kept in check until investors get a fuller picture of the global economy following Friday's U.S. nonfarm payrolls report. China's industrial output, investment and retail sales data is also scheduled for release on Friday.

The S&P 500 has tumbled for two days after finishing at its highest level since 2008 at the start of the month.


In U.S. corporate news, Dick's Sporting Goods ( DKS) reported net income of 88 cents per share in the fourth quarter, meeting analysts' expectations on Tuesday. The company brought in net sales of $1.6 billion, compared to consensus forecast of $1.61 billion. For the full year 2012, Dick's Sporting Goods estimates earnings of $2.38 to $2.41 and a 2% to 3% increase in sales. Shares were falling 1.4% to $45.57.

Qualcomm ( QCOM) announced a 16% increase in the company's quarterly dividend. The current dividend will increase to $0.25 a share from $0.215 a share, raising the annual dividend payout of $1 a share. The company's board also plans to repurchase $4 billion in stock instead of $3 billion. Shares were up 0.5% to $62.40.

Chesapeake Energy ( CHK), the second-largest natural-gas producer in the U.S., is expected to announce a $250 million partnership as soon as Tuesday with private-equity firm KKR to invest in U.S. oil and gas fields, The Wall Street Journal reported, citing people familiar with the matter. Chesapeake hopes to raise between $10 billion and $12 billion this year through a combination of asset sales, joint ventures and other transactions, the Journal noted. The Chesapeake and KKR tie-up illustrates how U.S. oil and gas producers, hurt by slumping natural-gas prices and rising drilling costs, are hunting for sources of capital, the Journal said. Shares were down 0.9% to $24.23.

Supermarket chain Safeway ( SWY) said that it sees earnings of $1.90 to $2.10 a share for 2012. The forecast beat estimates for $1.88 for the full year, according to Thomson Reuters. In 2011, the company earned $1.78 a share. Sales, excluding gas, are expected to grow by 1% to 2% as the company expects to benefit from remodeling at many of its stores.Shares were up 4.1% to $23.

April oil futures were off 77 cents to $105.95 a barrel, while April gold futures were falling $17 to $1,686.90 an ounce.

The benchmark 10-year Treasury was up 11/32, diluting the yield to 1.983%, while the U.S. dollar index was up 0.4% at $79.64.

No major U.S. economic reports were expected Tuesday.

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.

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