Futures Plunge Amid Tensions in Korea
U.S. stock index futures remained lower after news of a better-than-expected revision for third quarter Gross Domestic Product as investors added an escalating conflict in Korea to the growing list of concerns dragging market sentiment lower.
Gross domestic product growth in the third quarter was revised to an annualized rate of 2.5 percentfrom a previous estimate of 2.0 percent, pulled higher by exports and stronger consumer and government spending, the Commerce Department said. The faster pace of growth was not enough to address high unemployment.
North Korea fired artillery shells at an island in South Korea, causing fatalities and extensive damage, while re-igniting the long-standing tensions between the two countries. The White House condemned the attack and demanded the all further attacks be stopped.
"There's no lack of worries in the market and today's incident only adds to the concerns and certainly there will be more selling pressure in the short term," Chi Lo, CEO of HFT Investment Management, told CNBC.
If the situation is resolved quickly, it will be unlikely to affect the fundamentals of the stock market, he added.
European shares were also lower with the concerns over Korea adding negative sentiment to the ongoing worries of the Irish economic woes. The Irish government is struggling to hold together in time to pass the austerity budget vote in two weeks. Meanwhile, Ireland's central bank Governor Patrick Honohan said that the country's banks are effectively for sale.
Asian indexes closed mostly lower. The dollar gained as investors sought the safety of the U.S. currency, while gold rose slightly to about $1,360 an ounce.
On the economic front, investors will get details of the Federal Open Market Committee's decision to pump a second tranche of liquidity into the markets when minutes from its November meeting will be released. October existing home sales data is due at 10 a.m.
In other news, the Federal Bureau of Investigation has raided three hedge funds. The move is part of a wider investigation to uncover insider trading crimes in the industry.
TPG Capital and Leonard Green & Partners were close to buying J Crew Groupfor $43.50 a share, or about $2.8 billion, sources familiar with the deal said. Shares of the retailer, which is expected to report quarterly results later, soared in the pre-market.
In earnings news, Hewlett-Packard's shares rose in pre-market trading after reporting Monday that profit and revenue beat expectations. The tech giant raised its fiscal 2011 revenue and earnings forecasts.
Campbell Soup shares fell after reporting its fiscal first-quarter earnnings fell 8.2 percent as sales slowed.
On Tap This Week:
TUESDAY: Existing home sales, 5-yr note auction, FOMC minutes, FDIC quarterly report on bank earnings
WEDNESDAY: MBA mortgage apps, durable goods orders, personal income and spending, jobless claims, consumer sentiment, new home sales, oil inventories, 7-yr note auction; Earnings from Deere and Tiffany
THURSDAY: Thanksgiving Holiday — All markets closed
FRIDAY: Black Friday — NYSE early close
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