MN: Dow futures imply triple-digit loss at open amid global worries
By Anora Mahmudova and Barbara Kollmeyer, MarketWatch Global stocks under pressure, yuan suffers record loss
NEW YORK (MarketWatch) -- U.S. stock futures fell sharply on Tuesday and the Dow Jones Industrial Averages looked set to open with a triple digit loss, as global equity investors eschewed risky stocks in favor of haves like Treasurys and gold.
10-year Treasurys rallied, sending yields down to 2.22% while gold prices jumped nearly 2% on Tuesday.
Fresh speculation the Federal Reserve may be close to pulling back its pledge to keep rates low may have contributed to selling pressure.
Futures for the Dow industrials (DJZ4) fell 154 points, or 0.9%, to 17,700, while those for the S&P 500 index (SPZ4) slid 19 points, or 0.9%, to 2,040. Futures for the Nasdaq-100 index (NDZ4) slid 43 points, or 1%, to 4,236.
On Monday, the S&P 500 (SPX) suffered its biggest one-day slide in seven weeks, dogged by a selloff in energy companies and downbeat global economic reports.
Oil prices (CLF5) were rebounding from five-year lows early Tuesday, but action was volatile. Both Jefferies and Macquarie slashed their prices for the commodity, saying more pain is coming.
Fed rate-hike worries redux: In an article that published late Monday in The Wall Street Journal, Jon Hilsenrath said Fed officials meeting next week will likely affirm a plan to start raising short-term interest rates in 2015 and are debating losing a key phrase, that rates will stay low for "a considerable time."
This report comes on the heels of Friday's U.S. jobs report, which indicated wages are picking up again and the economy is returning to some sort of normalcy.
The markets should be reading this as a sign the economy is recovering well and no longer needs such central-bank support, said Craig Erlam, market analyst at Alpari U.K., in a note.
"However, with stock markets trading at record-high levels as investors search for yield and Treasuries also trading near highs, the actual reality is that we may need to see markets correct, something all investors appear to be perfectly aware of and fearing," he added.
Small-business sentiment reached a seven-year high in November, as expectations for business conditions in six months surged and expectations for real sales volumes also gained, the National Federation of Independent Business said Tuesday. At 10 a.m. Eastern, job openings and wholesale inventories for October will be released.
Stocks to watch: AutoZone Inc. (AZO) shares rose more than 3% premarket as quarterly results topped analysts' expectations. Sales rose thanks in part to lower gas prices, the company said.
Burlington Stores Inc. (BURL) shares jumped after the off-price retailers beat earnings expectations and raised its full-year guidance.
Krispy Kreme Doughnuts Inc. (KKD) is due to announce results on Tuesday.
Bluebird Bio Inc (BLUE) surged 53% after the company reported promising trial results for an experimental gene therapy to treat patients with an inherited blood disorder.
Analysts at Jefferies downgraded Schlumberger Ltd. (SLB), Oceaneering International Inc. (OII) and Nabors Industries Ltd. (NBR) to hold from buy, as they lowered estimates and price targets across the oil services and equipment sector to account for lower oil prices. Jefferies cut its Brent price to $72.25 a barrel from $90 a barrel for 2015.
Global markets under pressure: The Stoxx Europe 600 index fell more than 1%, hit by weak German trade data and energy-stock losses. The FTSE 100 index slid on fears that China will cut its growth forecast, which hit commodity-related stocks. Greek stocks fell sharply as a high-stakes vote for presidency was brought forward. National Bank of Greece SA (NBG) fell 15% in premarket trading.
It was a high-drama day in Asia. The Shanghai Composite Index swung from a a 2.4% rise to a closing loss of 5.4%. China's stocks, currency (CNYUSD) and corporate bonds were hit hard after Beijing banned investors from using low-grade corporate debt as collateral to borrow cash.
Gold prices(GCG5) surged 2% as investors shied away from stocks, and the yen (USDJPY) regained interest from investors seeking alternative haven investments, inching up against the dollar.
