By Barbara Kollmeyer, MarketWatch
Merger updates lift 21st Century Fox, batter Sprint
MADRID (MarketWatch) -- Failed merger news, geopolitical
tensions and downbeat European economic news pushed U.S. stock
futures into the red on Wednesday, potentially setting Wall Street
up for another day of losses.
Just one piece of economic data from the U.S. is due, while
shares of Groupon Inc., 21st Century Fox Inc., Sprint Corp. and
Walgreen Co. were active in the premarket.
Futures for the Dow Jones Industrial Average (DJU4) fell 64
points, or 0.4%, to 16,304, while those for the S&P 500 index
(SPU4) eased 7.1 points, or 0.4%, to 1,905.90. Futures for the
Nasdaq-100 index (NDU4) tumbled 20.50 points, or 0.5%, to
3,851.25.
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.
Also read: Here is when Fed officials forecast an interest-rate
hike
European tension
Europe's economy 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 1.4%, while stocks in Italy sank 3%. 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 1.5%.
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 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. (Read more on why stocks are down in Wednesday's Need to Know
http://www.marketwatch.com/story/walgreen-to-buy-remaining-stake-in-alliance-boots-2014-08-06-61035145.)
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 on the move
Shares of Groupon (GRPN) slid 17% in premarket after the
daily-deals company posted disappointing results late Tuesday.
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 shares
fell 11%.
Time Warner will report results ahead of the bell on
Wednesday.
Sprint (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. Sprint shares
slid 20%.
And shares of Walgreen Co.(WAG) fell nearly 9% after the company
said it will buy the remaining 55% of Alliance Boots GmbH that it
doesn't already own. The drugstore also said it will keep
headquarters in the U.S., news that will disappoint a group of
investors trying to persuade the company to relocate its
headquarters to tax-friendly Switzerland.
First Solar Inc. (FSLR) eased 4%after the solar-energy company
posted an earnings fall late Tuesday.
Shares of Walt Disney Co. (DIS) inched lower. The company
reported a 22% rise in fiscal third-quarter earnings, thanks in
part to the animated blockbuster "Frozen."
More must-reads from MarketWatch:
The U.S. pump-and-dump
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