Stock Futures Tank on 'Fiscal Cliff' Woes

NEW YORK ( TheStreet) -- Stock futures were tanking Friday after House Speaker John Boehner, in a surprise move, cancelled Thursday evening's vote on his "Plan B" fiscal-cliff proposal because he wouldn't have had enough votes to get the measure passed.

Stock futures promptly dropped following word of the cancellation Thursday as investors were thrown into state of great worry about the ability of officials in Washington to strike a budget deal as the "fiscal cliff" deadline line looms on Jan. 1.

Futures for the Dow Jones Industrial Average were plunging by 175 points, or 149.72 points below fair value, at 13,092. Futures for the S&P 500 were down by 19.75 points, or 16.64 points below fair value, at 1420. Futures for the Nasdaq were slumping by 40.75 points, or 38.80 points below fair value, at 2649.

Volumes were expected to swell at the open, with Friday being a "quadruple witching" options expiration day.

"Simply put, this is bad news for the speaker and bad news for any future cliff-averting deal," said Dan Greenhaus, chief global strategist at BTIG. "A bunch of people have asked 'now what?' with respect to the fiscal cliff story. Unfortunately, the simple answer is that nobody knows."

Greenhaus said it seems the most likely option now is for the President Barack Obama and Senate Majority Leader Harry Reid to construct a bill in the Senate. He said that while a bill in the Senate can pass, the question thereafter is whether that bill can get enough Democratic votes in the House to compensate for the defecting Republicans.

It would need to be a "very" bipartisan bill, Greenhaus noted. "In any event, there's just no way, no way, it can be constructed in three days."

Gareth Berry, a foreign-exchange strategist at UBS, said he thinks the headlines have been looking worse than they actually are. "After all, the plan was doomed to begin with given Democrats had already decided not to put it to a vote in the Senate, and U.S. President Obama had already threatened to veto it if necessary."

Berry also noted that "the nervous market reaction was justified to some degree however, given it illustrates just how difficult it will be to reach a compromise solution before year-end."

The Republican's "Plan B" counteroffer had included some spending cuts with tax increases only for those making more than $1 million.

On the U.S. data front, the Bureau of Economic Analysis reported personal income growth of 0.6% in November after an increase of 0.1% in October. Personal spending rose 0.4% after falling 0.1% in October. Economists, on averages, were expecting personal income growth of 0.3% and personal spending to rise by 0.3%.

The Census Bureau reported that durable goods orders rose 0.7% in November after increasing 1.1% in October, and that excluding the transportation component durable goods orders ticked up by 1.6% after rising 1.9% in October. Expectations were for a durable goods order rise of 0.2% and a decline of 0.2% excluding the transportation component.

At 9:55 a.m., the final University of Michigan consumer-sentiment index is predicted to edge up to 74.7 for December from the prior print of 74.5.

The FTSE 100 in London was slipping by 0.82% and the DAX in Germany was off by 0.68%. Hong Kong's Hang Seng index finished down by 0.68% and Japan's Nikkei average shed 0.99% Friday.

Gold for February delivery was up $1.50 at $1,647.40 an ounce at the Comex division of the New York Mercantile Exchange, while February crude oil contracts were off by $1.09 at $89.04 a barrel.

The benchmark 10-year Treasury was up 10/32, diluting the yield to 1.766%. The dollar was up 0.14%, according to the U.S. dollar index.

In corporate news, Research In Motion ( RIMM) reported a fiscal third-quarter loss Thursday that was narrower than Wall Street's expectations.

The stock of the BlackBerry maker moved higher in after-hours trading Thursday but reversed course during an earnings call after RIM said it would change the way it charges customers service fees, putting a key source of revenue at risk.

Shares were plunging more than 12.5% in premarket trading Friday.

Red Hat ( RHT) posted third-quarter sales that topped analysts' estimates and it announced Thursday it was acquiring ManageIQ, a cloud software company, for $104 million in cash.

Shares were gaining more than 5%.

Nike's ( NKE) second-quarter earnings fell 18% but topped expectations because of strong demand in North America.

Shares were up nearly 4%.

Walgreen ( WAG) reported first-quarter earnings of 58 cents a share on revenue of $17.3 billion, falling short of the average analyst estimate of 70 cents a share on revenue of $17.45 billion as prescription sales in comparable stores decreased 11.3%.

Shares were sliding more than 2.5%.

Crane ( CR) said it would acquire privately held MEI Conlux Holdings and its Japanese affiliate for about $820 million.

Crane is buying MEI from Bain Capital and Advantage Partners.

Greenbrier Cos. ( GBX) rejected a sweetened bid from American Railcar Industries ( ARII), which is controlled by investor Carl Icahn.

The board of flash-memory maker SanDisk ( SNDK) approved an additional $750 million for stock buybacks, bringing the total stock repurchase authorization to $1.25 billion.

Ameristar Casinos ( ASCA) announced that it has agreed to be acquired by Pinnacle Entertainment ( PNK) for $26.50 a share in cash, representing a premium of 45% over the average closing price of Ameristar common stock for the 90 days ended Dec. 20.

Ameristar shares were soaring by 17%.

-- Written by Andrea Tse in New York.

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

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