Futures Fall After Long Weekend
After a long Memorial Day weekend, futures indicated a negative open for Wall Street Tuesday as reports that North Korea launched missiles caused alarm.
North Korea fired two short-range missiles on Tuesday off its east coast, Yonhap news agency quoted a South Korean government source saying. The move underlined political risk as a factor in markets, analysts told Reuters.
U.S. consumer confidence data for May is due out at 10 am New York time, while the March results from the S&P Case-Shiller Home Price Index will be out at 9 am New York time.
Investors will also pay close attention to General Motors this week as the government’s June 1 restructuring deadline looms.
The United Auto Workers starts voting on Tuesday on new cost cuts it agreed to with General Motors last week. The Canadian Auto Workers union approved a new round of concessions on Monday, which will cut GM’s hourly labor costs there by 30 percent.
GM’s bondholders must decide by Tuesday whether to swap their debt for stock — GM wants to cut about 90 percent of its $27 billion in bond debt, a target analysts polled by Reuters believe is unreachable.
Three state-run funds in Indiana are reportedly asking a judge to review Chrysler’s plan to exit bankruptcy. But the ailing automaker said any delay in the bankruptcy process could derail the more than $10 billion in financing promised by the U.S. and Canadian governments. That money will only be provided if Chrysler’s sale to Fiat is completed by mid-June.
A greater test of market sentiment comes later in the week with the U.S. Treasury’s note auctions totaling $101 billion. The government will sell two-year notes on Tuesday, five-year notes on Wednesday and a seven-year paper on Thursday.
Oil prices will also be in focus this week as OPEC meets on Thursday to decide on oil output levels. Many believe the oil cartel will leave production unchanged as oil prices and demand have recently made a comeback.
In corporate news, Lehman Brothers’ U.S. estate administrators will ask a federal judge on Tuesday to approve a framework for coordinating bankruptcy proceedings for the bank’s subsidiaries worldwide, putting them at odds with its UK administrators, the Wall Street Journal reported.
Freddie Mac plans to sell about $1 billion in commercial mortgage bonds backed by multi-family loans on Tuesday. It’s the first time a commercial mortgage bond is being auctioned with the backing of a government-sponsored enterprise. It’s also the first commercial mortgage bond deal in almost a year.
And the Obama administration will announce it plans to spend $4 billion to create so-called “green jobs” in the public housing sector. The money will come from the $787 billion economic stimulus package and will be used to make public housing more energy efficient. An additional $500 million will go towards training workers for these new jobs.