By Barbara Kollmeyer, MarketWatch
German output sees surprising fall on Russia-Ukraine
tensions
MADRID (MarketWatch) -- Stock futures fell Wednesday, tracking
losses across Europe after data pointed to difficulties for two of
the euro zone's biggest economies, and as investors waited for
Russia-Ukraine developments that could help determine Wall Street's
mood.
There is little U.S. data, but earnings news could continue to
weigh on Groupon Inc., while a couple of failed mergers could draw
attention to related shares.
Futures for the Dow Jones Industrial Average (DJU4) fell 31
points to 16,335, while those for the S&P 500 index (SPU4)
eased 1.6 points to 1,911.40. Futures for the Nasdaq-100 index
(NDU4) dropped 4.75 points to 3,867.
Trade deficit data for June will be released at 8:30 a.m.
Eastern Time. Also on the economic front, Dallas Federal Reserve
President Richard Fisher said after the close of Wall Street's
session that the central bank may need to hike rates sooner than
expected, if data continues to be as strong as the July Institute
for Supply Management's service-sector index. The index reached the
highest level since Dec. 2005 on Tuesday.
European tension
But it is Europe's economy that may provide extra tension for
Wall Street on Wednesday. Stock futures pushed into the red after
news that Italy unexpectedly fell back into recession in the second
quarter, as its gross domestic product shrank 0.2%.
Already rattled by Russia-Ukraine fears, the Stoxx 600 index
fell 1.3%, while stocks in Italy tumbled 2.2%. Other data showed
German manufacturing orders dropping a surprising 3.2% in June on
an adjusted basis, as geopolitical worries held back orders. The
German DAX 30 index dropped 1.6%.
Investor sentiment was already dented by Tuesday's selling
action on Wall Street, driven by reports that Russia has
dramatically lifted the number of troops and vehicles on its border
with Ukraine in the past few days. Polish Foreign Minister Radoslaw
Sikorsk said in a television interview on Tuesday that there were
more than a "dozen battalion-sized combat groups" on that border,
Bloomberg reported.
In addition, Russian President Vladimir Putin also reportedly
told his government to prepare retaliatory measures against
sanctions by the U.S. and Europe. The DJIA closed down 0.8%, or
139.81 points, to 16,429.47, while the S&P 500 (SPX) dropped
1%, to 1,920.21, on Tuesday.
"With the Dow Jones brushing the 200-day moving average for the
first time since the end of January, there will be a lot of nervous
bulls out there," said Chris Beauchamp, market analyst at IG, in a
note.
Jitters carried over into Asia, where the Nikkei 225 index slid
1%. In other markets, Gold prices (GCU4) remained firm, while oil
(CLU4) held steady ahead of inventory reports due later, and the
dollar traded choppy.
Groupon, Time Warner, Sprint among stocks to watch
Corporate news might provide some distraction. Shares of Groupon
(GRPN) slid 15% in Tuesday's late trade after the daily-deals
company posted disappointing results. Groupon may not be bargain
stock it seems
Investors will be chewing over some failed merger news. 21st
Century Fox Inc. (NWSA) said late Tuesday that it was yanking its
proposal to buy Time Warner Inc. (TWX) after its approaches were
rejected. 21st Century Fox also approved a $6 billion share buyback
program, and shares rose 8% in late trading.
Time Warner will report results ahead of the bell on Wednesday,
along with Viacom Inc. (VIA)
Sprint Inc. (S) also said it would end its pursuit of T-Mobile
US Inc. (TMUS) and would replace Chief Executive Dan Hesse with
billionaire entrepreneur Marcelo Claure, who is untested as a
wireless operator, The Wall Street Journal reported.
First-Solar Inc. (FSLR) could add to a 5% drop in late trade
after the solar-energy company posted an earnings fall.
Shares of Walt Disney Co. (DIS) could be active after the
company reported a 22% rise in fiscal third-quarter earnings,
thanks in part to the animated blockbuster "Frozen."
More must-reads from MarketWatch:
How you'll know if it's time for a market crash
Preparing for a Fed change of heart
Subscribe to WSJ: http://online.wsj.com?mod=djnwires