Futures Down as ECB Enthusiasm Wanes
Wall Street looked poised for a mixed opening Wednesday, after earlier enthusiasm for a massive European Central Bank loan offering waned.
The European Central Bank offered 489.2 billion euros ($643.8 billion) in an auction of three-year loans, much higher than estimated, with a total of 523 bidders.
Traders polled by Reuters just hours before the operation expected the ECB to allot 310 billion euros up from a forecast of 250 billion euros in a poll on Monday. The move is part of the ECB's Long-Term Refinancing Operations, or LTRO.
Analysts said take-up above 350 billion euros would be a positive sign for strained countries and a potential catalyst for some thawing of the frozen money market, whereas a low amount would increase money and bond market jitters.
Franklin Templeton's Mark Mobius, considered a pioneer in emerging market investment, said he expects the sovereign debtcrisis to be resolved by mid-year in 2012.
"The European crisis isn't as deep and terrible as people think," Mobius said, according to a Reuters report. "Nations there are in a process of negotiations and that takes time."
Traders, though, grew less impressed with the European situation as the morning went on, tempering a rally in European stocks and pulling U.S. futures well off their highs.
Attention focused as well on Oracle , which will be in the spotlight after it posted earningsthat fell short of Wall Street's forecasts for the first time in a decade after the bell on Tuesday; Oracle's software and hardware sales sputtered, stoking fears a global recession will hurt tech spending. Shares of the company tumbled 10 percent in premarket trading.
Walgreen earnings also left the market disappointed after the pharmacy chain posted profit of 63 cents a share, four cents below estimates. Shares fell 7 percent.
Contract manufacturer Jabil Circuit posted quarterly revenue below analysts' estimates as its large customers battled inventory pile-ups, and sees lower revenue in the second quarter from its high-velocity segment which services digital products. Shares dipped 3 percent premarket.
Paychex posted quarterly profit that beat market expectations helped by revenue growth in its payroll processing and human resources businesses, and said it continues to see a slow economic recovery with respect to sales from new clients. Its shares fell 1.8 percent premarket.
Battered Research in Motion shares also rebounded on news that the company had drawn interest from Microsoft, Amazon and Nokia.
A payroll tax cutfor 160 million American workers was in limbo on Wednesday with Democrats and Republicans in the U.S. Congress accusing each other of bringing an extension to a dead stop.
The issue is important for the impact it could have on growth projections in 2012.
Nomura Securities economist Lewis Alexander said he expects a resolution in Congress. Failing to extend both the tax cut and unemployment benefits, he said, would lop 0.8 percentage points off next year's gross domestic product growth — a critical move being that the firm sees 2012 GDP at just 2.3 percent even with both measures.
"If these policies are not extended, the effect on our outlook for 2012 would be material," Alexander said. "The way Congress has handled this issue over the last week has generated substantial uncertainty."
Siemens will cut as many as 1,200 jobs from its Healthcare workforce worldwide amidst slowing growth in its diagnostics business, Healthcare finance director Michael Sen told a Swiss newspaper on Wednesday.
In mergers and acquisition news, Delphi Financial Group soared on news that Tokio Marine Holdings will buy the financial services holding company in a deal worth $2.7 billion.
In economic data, the Mortgage Bankers Assocationreported a decrease in home-loan demand last week. The National Association of Realtors releases existing home sales for November at 10 am. Economists in a Reuters survey forecast a 5.05 million annualized unit total versus 4.97 million annualized units in October.