Futures Remain Lower After Home Price News
U.S. stock index futures continued to fall sharply ahead of the open Tuesday after an index of home prices fell unexpectedly and as fear of contagion from the European debt crisis continued to rattle investors.
Home prices fell 1.5 percent in September, according to the Standard& Poor's/Case-Shiller house price index. Nationally, home prices fell 2 percent from a year earlier. Economists had expected home prices to rise 1.0 percent in September.
The spread between Italian and German 10-year government bond yields, and between Irish and German 10 year yields, hit a lifetime euro high. The market moves proved the recent bailout of Ireland hadn't drawn a line under concerns over Europe's debt situation.
Jim O'Neill, chairman of Goldman Sachs Asset Management, said on CNBC.com that European policy makers need to act together to stem the debt crisis or risk market pressure forcing a structurally vital country like Italy needing a bailout.
Portugal was also in the spotlight after the country's central bank warned its banks may face an "intolerable risk" if the country fails to consolidate its public finances.
European shares were mixed and struggled to find direction amid the concerns and Asian indexes closed mostly lower. European worries alsopushed the euro to 10-week lows, as the dollar rose against a basket of currencies.
Fears of debt problems were also present in the U.S., where a poll conducted by CNBC and Associated Press revealed that a majority of Americans think taxes will have to be raised and government services will have to be reduced in order to cut the federal deficit.
In corporate news, Google was close to a deal to buy online discounter Groupon for $5 billion to $6 billion, according to reports. The deal, which could happen this week, would be Google's largest acquisition.
Merck announced Kenneth Frazier, currently president of the drugmaker, will become chief executive officerwhen CEO Richard Clark retires early next year. Clark will continue as chairman of the board.
Lowe's backed its profit and sales estimates for this year, and said it would unveil plans to continue growth. The home improvement retailer is holding an analyst and investor meeting.
Also on the economic front, analysts expect U.S. auto sales in Novemberheld above 12 million vehicles on an annual basis, a gain of about 10 percent from a year earlier. Sales were boosted by discounts and a slow return of consumer demand, analysts said. Actual figures will be released by the auto companies on Wednesday.
The November Chicago Purchasing Managers Index will be out at 9:45 a.m. and November consumer confidence data will be out at 10 a.m.
The expiring Bush tax cuts will be under discussion when President Obama meets with Republican leaders at a return to Congress later in the session.
On Tap This Week:
TUESDAY: ISM-NY report on business, S&P/Case-Shiller home price index, consumer confidence, Minnesota Fed Pres Kocherlakota speaks, Bernanke speaks, Obama meets with Congressional leaders
WEDNESDAY: Auto sales, MBA mortgage applications, Challenger job-cut report, ADP employment report, productivity and costs, ISM mfg index, construction spending, oil inventories, Beige Book, Fed vice chair Yellen speaks
THURSDAY: ECB announcement, jobless claims, pending home sales, Philadelphia Fed Pres Plosser speaks, Fed Gov. Duke speaks, chain-store sales; Earnings from Toll Brothers, Del Monte and Kroger
FRIDAY: Employment situation, factory orders, ISM non-mfg index
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