MW: Wall Street set to rise as banks grab spotlight
By Shawn Langlois and Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — U.S. stocks were poised Friday to bounce back from the prior session’s drop, even as the mood darkened in Europe after Moody’s Investors Service slashed the credit ratings of 15 banks, including Barclays, Deutsche Bank, RBS and BNP Paribas, along with many of North America’s biggest banking names.
Futures on the Dow Jones Industrial Average DJU2 +0.30% added 53 points, or 0.4%, to 12,556 points. Those on the S&P 500 index SPU2 +0.33% rose 6.3 points, or 0.5%, to 1,324.60, while and the Nasdaq Composite futures NDU2 -0.07% moved 10 points, or 0.4%, higher, to 2,561.75.
The Dow Jones Industrial Average DJIA -1.96% endured its second-worst day of the year Thursday, sinking 250.82 points, or 2%, to 12,573.57. Sentiment was dented as economic reports indicated a slowdown in global manufacturing. See Market Snapshot for details of the Thursday selloff on Wall Street.
On the heels of the Moody’s move, banks were slammed along with the broader market Thursday, with Bank of America Corp. BAC +1.54% losing almost 4%. The stock edged higher in premarket trades Friday, up 0.5% at $7.86. See MarketPulse for a list of the 15 banks downgraded by credit-ratings agency Moody’s .
“I think the meeting between the big four of Europe in Rome and the fact that Spain is likely to formally ask for bank aid [are] helping to calm the markets after yesterday's risk-averse session,” said Peter Cardillo, chief market economist at Rockwell Global Capital, in emailed comments.
The leaders of France, Germany, Italy and Spain are due to gather Friday for a mini summit in Rome ahead of the June 28-29 European Union summit, according to media reports.
Outperforming otherwise downbeat European indexes, Spain’s IBEX 35 XX:IBEX +1.84% jumped 1.3% on Friday. A day earlier, the first of two sets of audits of the nation’s banks did not reveal any deeply negative surprises. The government is expected formalize a bailout request to the European Union in the coming days.
Cardillo said investors had fixated Thursday on the manufacturing surveys while underemphasizing leading-indicators data that came in “better than expected — indicating slow growth, but no danger of recession.”
No economic indicators are scheduled for release Friday.
David Morrison, an analyst for GFT Markets, said the day’s question is whether Wall Street can find a foothold or will drop further ahead of the weekend. “Investors have had to contend with a full skip load of bad news this week,” Morrison explained. “Economic data from the U.S., Europe and China has worsened; the debt crisis across Europe continues to deteriorate; and the U.S. Federal Reserve held back from expanding its balance sheet through further asset purchases.”
The Stoxx Europe 600 index XX:SXXP -0.57% shed 0.6% to 246.81 points, with the banking sector applying pressure. Data out of Germany also provided a headwind.
The closely watched Ifo gauge of business sentiment fell in June to 105.3 vs. a forecast for a reading of 105.6 for the month, or slightly more than expected. See full story on Germany’s Ifo index.
Banks will again be a market focus Friday. Citigroup Inc. C +0.61% , Goldman Sachs Group Inc. GS -2.74% and J.P. Morgan Chase & Co. JPM -2.58% looked in the premarket as if they could show signs of life after the beating they took a day earlier.
Among likely movers outside the financial sector, shares of Ryder System Inc. R -9.94% were set to pull back after the transportation company cut its second-quarter and full-year forecasts.
On the earnings front, cruise-line operator Carnival Corp. CCL -2.15% and restaurant chain Darden Restaurants Inc. DRI -3.06% are both expected to post quarterly results.
Shawn Langlois is an editor and columnist for MarketWatch in London.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
