WSJ:US Stock Futures Lower On European Turmoil; Swiss Franc Slumps
By Barbara Kollmeyer
U.S. stock futures were pointing to losses for Wall Street on Tuesday, as investors return from the long Labor Day weekend to face European turmoil and lingering disappointment over last week's jobs data.
The Swiss franc tumbled against the euro and other major rivals after the Swiss National Bank took the extraordinary step of setting a floor for the euro/Swiss franc exchange rate.
Stock futures pared losses, but remained lower, as European stock markets attempted to rebound from a bruising prior session.
Futures on the Dow Jones Industrial Average fell 196 points to 11012. Those on the Standard & Poor's 500 Index dropped 23 points to 1146.25. Nasdaq 100 futures shed 32.75 points to 2132.
"Many will be looking for the U.S. market open to be a calming influence; however, after yesterday's moves in Europe, the U.S. indices will need a chance to react, and that reaction may not be pretty," said James Hughes, senior market analyst at Alpari U.K. Ltd., in a note.
The Stoxx Europe 600 index rose 0.1% on Tuesday after slumping 4.1% in the prior session. Monday's fall was the biggest one-day percentage decline since Aug. 18 amid worries over Europe's sovereign-debt crisis and concerns that growth in the U.S. is stalling.
The German DAX 30 and France CAC 40 indexes both rose 1% and 0.5%, respectively, after marking new closing lows for 2011 on Monday.
Worries over the sovereign-debt crisis were aggravated after a weekend loss by German Chancellor Angela Merkel's Christian Democratic Union in regional elections in her home state.
"It is widely thought that the crisis in Europe will claim many of the euro-zone governments, leaving in their place administrations that are even more opposed to giving financial aid to the more at-risk nations, and the creation of euro bonds, the only measure that some think will save the euro," said Hughes.
Italy contributed to worries, with the government under pressure to implement austerity measures, as the country braced for a general strike on Tuesday protesting those very reforms. Bonds yields have been rising for both Spain and Italy.
Investors fleeing perceived riskier assets such as stocks, piled into gold, with December futures up $5.40 to $1,882.30 an ounce. October oil futures fell $1.64 to $84.81 a barrel, on the view that weaker global growth will lead to lower demand for crude.
Data released Friday showed no jobs growth in the U.S. in August. The Dow Jones Industrial Average closed at 11240.26, down 253.31 points, or 2.2%. The Nasdaq closed at 2480.33, down 65.71 points, or 2.2%. The S&P 500 finished at 1173.97, down 30.45 points, or 2.5%.
Fresh data Tuesday will come from the Institute for Supply Management, which will release its index of activity for the U.S. services sector. That's expected to show a slowdown, but not outright contraction, in the rate of growth for non-manufacturing firms.
On the corporate side, Walgreen Co. (WAG) and Fastenal Co. (FAST) are scheduled to release August sales numbers.
Meanwhile, Deutsche Telekom AG (DTE.XE, DTEGY) said the break-up fee it negotiated with AT&T Inc. (T) won't be jeopardized if the planned $39 billion sale of T-Mobile USA fails.
Shares of Sunoco Inc. (SUN) could be in focus after the firm announced it will exit the refining business and is conducting a strategic review. It expects to record a pretax non-cash charge of between $1.9 billion and $2.2 billion in the third quarter, related to the sale of two refineries.
Also in the spotlight, power provider AES Corp. (AES) said Chief Executive Officer Paul Hanrahan will step down as of Sept. 30, and will be succeeded in the post and on the board by Chief Operating Officer Andres Gluski.
The euro, meanwhile, shot higher against the Swiss franc after the Swiss National Bank said it would not allow the euro to drop below 1.20 francs, and would "enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities."
The euro jumped 9% against the franc to 1.2031 francs, and is down 3.5% year-to-date against the Swiss currency.
The U.S. dollar rallied nearly 8% against the franc.
The Swiss franc has been a safe haven for investors seeking shelter from worries over global growth and the European debt crisis. But the strong currency has wreaked havoc for many Swiss companies as their exports have grown more and more expensive.
The dollar index, which measures the performance of the dollar against a basket of six currencies, traded at 75.249 compared to 75.020 in late North American trading on Monday.
