U.S. Stock Futures Slip, France Downgrade Weighs on Confidence

Date : 11/20/2012 @ 8:49AM
Source : Dow Jones News

U.S. Stock Futures Slip, France Downgrade Weighs on Confidence

--U.S. markets slipping after strong rally Monday

--Moody's downgrade to France's credit rating weighing on markets

--Asian markets slip after Bank of Japan holds monetary policy intact

   By Patrick McGee 

NEW YORK--U.S. stock futures are in a modest retreat Tuesday ahead of housing starts data, after shares rallied strongly to begin the week.

Investor enthusiasm waned after France was stripped of its AAA status late Monday by Moody's Investors Service.

About 90 minutes ahead of the open, Dow Jones Industrial Average futures fell 20 points, or 0.2%, to 12718.

Standard & Poor's 500-stock index futures fell two points, or 0.1%, to 1380.60, and Nasdaq 100 futures fell 0.50 points, or 0.1%, to 2584. Changes in stock futures don't always accurately predict stock moves after the opening bell.

On Monday, the Dow climbed 207.65 points, or 1.7%, marking its biggest one-session rise since Sept. 6. The S&P 500 gained 27.01 points, or 2%, and the Nasdaq jumped 62.94 points, or 2.2%.

Moody's, following in the footsteps of Standard & Poor's in January, downgraded France's credit to Aa1, citing the country's struggling fiscal outlook coupled with "structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labor, goods and service markets."

French bond yields, which move inversely to price, were modestly higher.

Data on new residential construction during October is due out at 8:30 a.m. EST. The median estimate of economists surveyed by Dow Jones Newswires is for a monthly decline of 4.5% to a seasonally adjusted annual rate of 833,000. Also at 8:30 a.m., housing permits are seen slipping 3.4% to an annualized annual rate of 860,000.

In corporate news, shares of Dow component Hewlett-Packard (HPQ) fell 9.4% in premarket trading after the technology company reported fiscal fourth-quarter revenue of $30.0 billion, down 7% from the prior year. The company generated $4.1 billion in operating cash flow and returned $384 million to shareholders in share repurchases and dividends.

European markets declined modestly after the Moody's downgrade, with the Stoxx Europe 600 falling 0.1% to 268.23. Also weighing on the markets is anticipation over the latest word on Greek aid from the euro-zone finance ministers' meeting in Brussels.

Asian markets slipped as investor focus shifted to uncertainty in Europe. Japan's Nikkei Stock Average lost 0.1% to 9142.64, breaking a four-session upward streak after the Bank of Japan left monetary policy unchanged. China's Shanghai Composite shed 0.4% to 2008.92.

December crude oil futures fell 0.2% to $89.09 a barrel, while November gold futures were down 0.1% to $1,733.20 an ounce. The dollar gained against the euro and against the yen.

In other corporate news, shares of H.J. Heinz Co.'s (HNZ) rose 0.3% after fiscal second-quarter profit jumped 22% thanks to growth in emerging markets. Heinz has said it expects fast-growing emerging markets to make up roughly a quarter of its sales this year.

-Write to Patrick McGee at patrick.mcgee@dowjones.com

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