By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
U.S. trade deficit narrows to $41.5 billion in June
NEW YORK (MarketWatch) -- U.S. stock futures continued on a
downward path as failed merger news, geopolitical tensions and
downbeat European economic news weighed on sentiment ahead of the
market open on Wall Street.
The U.S. trade deficit shrank in June by more than expected, but
investor reaction was muted.
Futures for the Dow Jones Industrial Average (DJU4) fell 60
points, or 0.4%, to 16,306, while those for the S&P 500 index
(SPU4) eased 8 points, or 0.4%, to 1,905. Futures for the
Nasdaq-100 index (NDU4) tumbled 23 points, or 0.6%, to 3,849.
In today's sole economic news, the U.S. trade deficit shrank in
June, largely because imports of petroleum fell to the lowest level
since late 2010.
Meanwhile, 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.
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. On Wednesday, Poland's prime
minister said the risk of an invasion has intensified.
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 16% in premarket after the
daily-deals company posted disappointing results late Tuesday.
Groupon may not be bargain stock it seems
Meanwhile, Time Warner Inc. (TWX) shares sank after 21st Century
Fox Inc. (NWSA) said late Tuesday that it was yanking its proposal
to buy the company. And Sprint (S) shares sank after it ended 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 17%.
And shares of Walgreen Co.(WAG) fell 15% 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. Read about more notable
stock moves here.
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
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