Stocks to get hit by more European woes

@CNNMoneyInvest May 30, 2012: 9:04 AM ET
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NEW YORK (CNNMoney) -- Investors are headed for a tough day Wednesday as worries about Europe's debt, specifically the Spanish banking system, are again shaking confidence.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures fell nearly 1%. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

The European Central Bank issued a statement Wednesday saying that it had not approved a bailout for Bankia, the No. 4 bank in Spain, and that such a recapitalization could not be provided by the Eurosystem.

In addition, independent ratings agency Egan-Jones downgraded Spain's sovereign debt late Tuesday. The move raised more questions about the country's ability to fund bank bailouts that could reach as much as €100 billion.

Yields on 10-year Spanish debt soared to 6.62% Wednesday. Meanwhile investors flooded into U.S. Treasuries, raising prices and pushing the yield down to near a record low of 1.67% from 1.73% late Tuesday.

In addition, the European Commission's economic sentiment index fell for the second month in a row, hitting the lowest level since October 2009.

World markets were sharply lower on European worries. Britain's FTSE 100 (UKX) dropped 1.4% in afternoon trading, the DAX (DAX) in Germany lost 1.1% and France's CAC 40 (CAC40) plunged 1.4%.

CNNMoney's Fear & Greed Index, which measures investor sentiment, remains firmly in "extreme fear" territory.

U.S. stocks ended higher Tuesday, as investors welcomed a lack of negative headlines out of Europe and hopes that China would announce a new massive stimulus program in response to the slowing of the world's No. 2 economy.

However, hopes for more Chinese stimulus waned Wednesday after a comment by China's official news agency Xinhua made late Tuesday suggested that any spending program created would not approach the action taken in the country back in 2008.

Asian markets ended lower. The Shanghai Composite (SHCOMP) shed 0.2%, while the Hang Seng (HSI) in Hong Kong tumbled 1.9% and Japan's Nikkei (N225) fell 0.3%.

Economy: Pending home sales for April are expected to have increased by 0.6%, according to a survey of analysts by Briefing.com, after rising 4.1% the month prior.

Due later this week are the May jobs report, as well as key readings on manufacturing and auto sales. Economists surveyed by CNNMoney forecast that employers added 150,000 jobs in May, and that unemployment remained at 8.1%.

Companies: Shares of BlackBerry-maker Research in Motion (RIMM) tumbled 10% in premarket trading on news it hired JPMorgan (JPM, Fortune 500) and RBC Capital to review its strategic options, which is generally a signal it is putting itself up for sale. The company also warned it now expects an operating loss for its fiscal first quarter, which ends on June 2.

Shares of auto parts retailer Pep Boys (PBY) plunged 20% in premarket trading after the company announced that its previously announced purchase by The Gores Group has been called off.

Seed and herbicide maker Monsanto (MON, Fortune 500) raised its full year earnings guidance to between $3.65 to $3.70 a share, up from the $2.96 a share it earned a year ago and above the most bullish forecasts of analysts surveyed by Thomson Reuters. Shares climbed 2.3% in heavy premarket trading.

Shares of troubled natural gas producer Chesapeake Energy (CHK, Fortune 500) lost 1.1% in premarket trading. A wire service report late Tuesday said the company was preparing to meet with many of its major lenders later this week in an effort to raise the $9 billion to $10 billion needed to close a funding shortfall. The report cited people familiar with the matter.

Consulting firm Booz Allen Hamilton (BAH, Fortune 500) reported a better-than-expected gain in earnings.

TiVo (TIVO) and movie studio Lions Gate Entertainment (LGF) are expected to report results after the close.

TiVo is forecast to report a loss of 15 cents a share on $55 million in revenue. Lions Gate, which enjoyed a hit with the movie "Hunger Games," is expected to see earnings per share fall to 26 cents from 33 cents a year earlier.

Shares of Facebook (FB) lost another 0.5% in premarket trading, after closing down 9.6% Tuesday and hitting a new low. Facebook is now trading about 25% below its IPO price.

Currencies and commodities: The dollar gained ground against the euro and British pound, but fell versus the Japanese yen.

Oil for July delivery lost $1.05 to $89.71 a barrel.

Gold futures for June delivery rose $5.90 to $1,554.60 an ounce.

The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to a record low of 1.67% from 1.73% late Tuesday.  To top of page

Index Last Change % Change
Dow 16,677.90 216.58 1.32%
Nasdaq 4,452.79 69.95 1.60%
S&P 500 1,950.82 23.71 1.23%
Treasuries 2.28 0.05 2.06%
Data as of 6:06am ET
Company Price Change % Change
Apple Inc 104.83 1.84 1.79%
Bank of America Corp... 16.60 0.20 1.22%
AT&T Inc 33.66 -0.84 -2.43%
Microsoft Corp 45.02 0.64 1.44%
Facebook Inc 80.04 1.67 2.13%
Data as of Oct 23
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.98%3.93%
15 yr fixed3.04%3.04%
5/1 ARM3.30%3.69%
30 yr refi4.05%3.99%
15 yr refi3.11%3.10%
Rate data provided
by Bankrate.com
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