Stock futures fall after Portugal’s rating cut
Stock futures fell Wednesday on renewed concerns about European debt problems after a major ratings agency slashed its view on Portugal.
A report showing continued growth in the U.S. manufacturing sector had little effect on trading.
European markets are mostly lower after Fitch Ratings said Portugal’s recovery will be slower than other countries that use the euro, hurting Portugal’s ability to repay its debt. Debt problems in Europe have been one of the few drags on stocks in recent months.
Mounting debt in Greece, Portugal and other euro-zone nations have investors worried the countries will struggle to rebound economically and upend a global recovery.
The dollar strengthened sharply against the euro and other major currencies. The dollar is at its highest level against the euro since May.
The fresh worries about European debt more than offset expected signs of growth in the U.S. economy. Investors are awaiting reports on housing sales and durable goods orders that are expected to show growth in the sectors.
Ahead of the opening bell, Dow Jones industrial average futures fell 33, or 0.3 percent, to 10,795. Standard & Poor’s 500 index futures dropped 4.80, or 0.3 percent, to 1,164.80, while
The Dow rallied to its highest level since
The housing report is expected to show that sales rose 3.6 percent to a seasonally adjusted annual rate of 320,000 last month, bouncing off a record low seen in January, according to economists polled by Thomson Reuters. The report is due out at 10 a.m. EDT.
A recovery in the sector has been slow and uneven. Reports showing improvement or stabilization in the housing market have regularly been met with buying on Wall Street, such as Tuesday’s big gains. The Dow jumped nearly 103 points, or 1 percent, and has risen in 10 of the last 11 trading sessions.
Investors appear to be brushing off a report on orders to factories for big-ticket manufactured goods that showed continued growth. Unlike the housing market, the manufacturing sector has shown steady improvement in recent months.
Durable goods orders — items expected to last at least three years — rose 0.5 percent last month, slightly below expectations for 0.7 percent growth. However, it was the third straight month orders rose, and excluding the volatile transportation sector, orders jumped by more than expected.
Orders climbed 0.9 percent in February excluding aircraft and other transportation orders. Economists had forecast an increase of 0.6 percent.
In corporate news, General Mills Inc. said its fiscal third-quarter profit jumped 15 percent and topped forecasts. The maker of Cheerios and Yoplait yogurt also raised its earnings outlook for 2010, though it still falls short of analysts’ expectations.
Homebuilder Lennar Corp. said its fiscal first-quarter loss narrowed. The company said it is on track to return to profitability this year.
Meanwhile, bond prices fell sharply ahead of an auction for five-year Treasury notes. The yield on the five-year note rose to 2.50 percent from 2.43 percent.
The yield on the benchmark 10-year note, which moves opposite its price, rose to 3.78 percent from 3.69 percent late Tuesday.
Gold and oil prices fell.