MW: U.S. stock futures slip before retail sales data
U.S. stock futures pointed to a weaker start on Wednesday, with concerns over retail sales and a warning from Deutsche Bank reigniting worries over the economy at large and the financial sector in particular.
S&P 500 futures slipped 7.4 points to 861.20 and Nasdaq 100 futures dropped 9.5 points to 1,194.50. Dow industrial futures fell 62 points.
Wednesday's key economic release will be December retail sales, due at 8:30 a.m. Eastern.
Analysts polled by MarketWatch are expecting a drop in retail sales of 1.7% for December, following a decline of 1.8% in November.
Excluding autos, analysts are looking for a decline of 1.9%, compared with 1.6% in the prior month.
Import price and business inventory data also is due for release, as is weekly energy inventories.
Also coming will be the Beige Book of economic anecdotes.
The dollar edged up slightly vs. the Japanese yen but lost ground against the euro. Oil futures, buoyed by Saudi production cuts, rose above $39 a barrel.
Three-month LIBOR dropped to 1.08% from 1.09%, and the volume of applications filed to refinance existing mortgages rose to the highest level in more than five years.
That combination is causing some to look past dreary earnings.
"The money markets are slowly starting to loosen -- LIBOR rates continue to fall, and U.S. mortgage refinancing applications are holding at high levels. And if/when investors feel that a 2009 trough is in sight, stress-tested valuations will likely look undemanding," said Kevin Gardiner, head of global equity strategy at HSBC.
The bank sector was back in the spotlight as Deutsche Bank warned of a fourth-quarter loss of more than $6 billion, mostly on the back of credit losses. Deutsche Bank lost 9% in pre-market trade.
HSBC Holdings , another European banking giant, slumped 7% after a critical note from Morgan Stanley in which the broker said the lender may have to raise as much as $30 billion and slice its dividend in half.
The losses for Deutsche Bank and HSBC hit stocks in Europe, with the FTSE 100 losing 2% and the pan-European Dow Jones Stoxx 600 dropping 1.7%.
"There are no hiding places, even for good banks," said Derek Chambers, at Standard & Poor's Equity Research.
The banking sector also will be in the spotlight state-side as Morgan Stanley and Citigroup late Tuesday unveiled their plan for a brokerage joint venture, in which Citi will get $2.7 billion and 49% control for swapping its Smith Barney unit. At closing, Citi said it will recognize a gain of roughly $5.8 billion after taxes. The figures were in line with leaked media reports this week.
Citi shares lost 1% in pre-market action. Morgan Stanley wasn't active.
Outside of financials, Yahoo named Silicon Valley veteran Carol Bartz to replace Jerry Yang as chief executive. Yahoo shares rose 3%.
Tiffany fell 4% as the luxury retailer said holiday sales dropped 21% from last year's levels.
U.S. stocks finished mostly higher on Tuesday behind energy and financial shares. The Dow Jones Industrial Average slipped 25 points, but the S&P 500 rose 15 points and the Nasdaq Composite added 7 points. Asian stocks also closed higher overnight, with the Nikkei 225 edging up 0.3% in Tokyo.
