Futures Fall Ahead of Jobs Numbers
Stock index futures pointed to a lower open Wednesday ahead of key jobs and mortgage data and comments from Federal Reserve Chairman Ben Bernanke on the state of the economy.
The major indexes managed to close higher in the previous session following a sharp jump in pending-home sales. Asian stocks were mixed, but posted modest gains, while European indexes were lower across the board.
Enthusiasm for housing generated by an unexpected jump in pending home sales was tempered bit after an industry trade group said mortgage applications fell by 16.2 percent. The Mortgage Bankers Association attributed the drop to a tick higher in interest rates.
May’s ADP national employment report, which is out at 8.15 am, will be most closely watched by investors.
The ISM services index for May and April’s factory orders are both reported at 10 am.
At the same time, signs began to crop up that the bullish attitude toward US stocks was beginning to abate.
Credit Suisse kept its projection for the Standard & Poor's 500 at 920 for the year, but took its equity rating down to benchmark from overweight. The firm said surging Treasurys yields and a growing "scope for policy error" were dimming some of the allure for stocks.
"The recent rise in bond yields is worrisome--on our analysis, each 1 percent on ten-year yields takes 0.5 percent off GDP growth (and requires a 10 percent fall in house prices to leave affordability unchanged). We believe we are in an upward slowping W-shaped recovery."
Home builder Toll Brothers reported a loss for its fiscal second quarter as revenue halved from the same period a year ago. The quarterly loss was slightly wider than analysts had predicted.
Prudential Financial priced shares at $39 for a $1.25 billion share offering, sending the stock price down 2 percent in premarket trading.
Meanwhile, the government’s efforts to revive consumer and small business lending saw a boost in June as investors proved to be less wary of the Term Asset-Backed Securities Loan Facility.
On the tech side, shares of Cell Therapeutics surged more than 19 percent premarket after the company on Monday announced positive test results of pixantrone in treating non-Hodgins lymphoma. The company also amended and restated a modified Dutch auction for $118.9 million of oustanding convertible notes.
After the economic data has been digested focus will shift to Bernanke’s statement. He is due to appear before the House Budget Committee to testify on the "Current Economic and Financial Conditions and the Federal Budget" at 10 am.
In the auto sector, Chrysler's asset sale to Italian automaker Fiat could hit the skids as a U.S. Court of Appeals agreed to hear a challenge against the deal.
And the fate of General Motors and Chrysler employees hangs in the balance ahead of a testimony from GM CEO Fritz Henderson and Chrysler President Jim Press before the Senate Commerce Committee. The hearing, which begins at 2.30 pm, will explore the automakers’ plans to scrap franchise agreements with more than 2,300 showrooms nationwide.