News Column

Europe Worries May Lead To Sharply Lower Open On Wall Street - US Commentary

July 10, 2014

WASHINGTON (Alliance News) - Stocks are likely to come under pressure in early trading on Thursday, offsetting the moderate strength seen in the previous session. The major index futures are currently pointing to a sharply lower open for the markets, with the Dow futures down by 165 points.

Renewed concerns about the financial situation in Europe may contribute to an early sell-off on Wall Street after helping to drag European stocks sharply lower.

News that the parent company of Portugal'sBanco Espirito Santo has missed short-term debt payments has led to the latest worries despite assurances that the bank is protected.

Additionally, the futures saw further downside following the release of a report from the Labor Department showing an unexpected drop in initial jobless claims in the week ended July 5th.

The report said initial jobless claims fell to 304,000, a decrease of 11,000 from the previous week's unrevised level of 315,000.

The modest decrease came as a surprise to economists, who had expected claims to come in unchanged compared to the previous week.

While the data represents another upbeat sign for the labor market following last week's strong monthly jobs report, traders seem increasingly concerned about the prospect of higher interest rates.

In an interview with Bloomberg, St. Louis Federal Reserve President James Bullard suggested that the rapid drop in the unemployment rate is likely to push inflation well above the central bank's target.

Bullard, a policy hawk, said the Fed could subsequently face increased pressure to raise the main interest rate sooner than most officials have estimated.

Later in the day, traders are likely to keep an eye on remarks by Kansas City Fed President Esther George on the economy and monetary policy.

Stocks moved mostly higher over the course of the trading day on Wednesday, partly offsetting the notable pullback seen earlier in the week. The markets benefited from a positive reaction to earnings news from Alcoa (AA) and the minutes of the latest Fed meeting.

The major averages moved roughly sideways going into the close, hovering firmly in positive territory. The Dow climbed 78.99 points or 0.5% to 16,985.61, the Nasdaq advanced 27.57 points or 0.6% to 4,419.03 and the S&P 500 rose 9.12 points or 0.5% to 1,972.83.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan'sNikkei 225 Index dropped by 0.6%, while Hong Kong'sHang Seng Index rose by 0.3%.

Meanwhile, the major European markets have all come under pressure on the day. While the UK'sFTSE 100 Index has fallen by 0.8%, the French CAC 40 Index and the German DAX Index are both down by 1.5%.

In commodities trading, crude oil futures are sliding USD0.30 to USD101.99 a barrel after tumbling USD1.11 to USD102.29 a barrel on Wednesday. Gold futures, which rose USD7.80 to USD1,324.30 an ounce in the previous session, are jumping USD18.30 to USD1,342.60 an ounce.

On the currency front, the US dollar is trading at 101.26 yen compared to the 101.64 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at USD1.3613 compared to yesterday's USD1.3642.

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Source: Alliance News

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