MW: U.S. stock futures slip; euro drops below $1.30
Italy and Germany sell debt; Fed statement also in focus
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) — U.S. stock futures slid on Wednesday, as the euro dropped below the key $1.30 level after Italy had to pay a euro-era-high yield to sell five-year bonds.
Stock-index futures maintained their slide as the Norway joined the list of nations cutting interest rates, with its central bank making a reduction to 1.75%. The cut of half a percentage point was greater than the quarter of a point that had been expected.
Closer to home, U.S. import prices climbed 0.7% in November from the prior month.
Futures on the Dow Jones Industrial Average DJ2H -0.62% fell 14 points to 11,881 and those on the Standard & Poor’s 500 index fell 3.20 points to 1,217. Nasdaq 100 futures dropped 4.75 points to 2,262.75.
In the currency markets, the euro fell to $1.299, as the Italian Treasury sold 3 billion euros ($3.9 billion) of five-year bonds Wednesday and saw yields surge to euro-era highs of 6.47%.
In contrast, Germany sold €4.18 billion of two-year treasury notes at an average yield of 0.29%.
Kathleen Brooks, research director at Forex.com, said that $1.30 is “a key psychological level for the single currency and hasn’t been breached for 11 months.”
“If we see it fall through here, it signals a couple of things: first, the debt crisis has escalated and second, market sentiment toward euro-based assets has taken another turn for the worse,” she said in an email.
European stocks fell in afternoon trading, with the Stoxx 600 index XX:SXXP -1.03% down 1%.
Commodity futures also posted losses. Gold for February delivery GC2G -2.45% slumped $33.50 to $1,629.9 an ounce in New York. And January crude-oil futures CL2F -1.91% fell $1.68 to $98.46 a barrel.
The blue-chip Dow industrials DJIA -0.55% dropped 0.6% on Tuesday after the Federal Reserve kept interest rates on hold and didn’t signal another round of quantitative easing.
The Federal Open Market Committee said in a statement that the U.S. economy “has been expanding moderately, notwithstanding some apparent slowing in global growth.”
In corporate news, beauty company Avon Products Inc. AVP +8.92% said late Tuesday that it will look for a new chief executive officer. Andrea Jung, the firm’s current chairman and CEO, will assume the role of executive chairman.
California utility PG&E Corp. PCG +0.42% said Tuesday it will accept liability for the September 2010 natural-gas pipeline explosion that leveled a neighborhood and killed several people in San Bruno, a suburb of San Francisco. PG&E’s taking on financial responsibility to compensate all the victims for the injuries they suffered as a result of the accident.
