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Futures Dragged Lower on Euro Zone Fears

U.S. stock futures were dragged lower Wednesday, with the euro trading near 23-month lows against the dollar, as worries over the euro zone crisis intensified.

Futures had briefly pared their losses earlier after the European Commission said the euro zone must move towards a banking union, issue eurobonds and boost growth while cutting debt.

The report came as fears grew that Spain would be the next country in the euro zone to trigger a crisis after reports that the European Central Bank rejected Madrid’s plan to rescue its banking sector by tapping the central bank itself for funds.

The ECB denied the reports later in the day, saying in a statement it had "not expressed a position on plans by the Spanish authorities to recapitalize a major Spanish bank." It added that it "stands ready to give advice on the development of such plans."

European shares slippedand the euro touched a 23-month lowas investors worried that Spain's banking problems would push its borrowing costs near highs not seen since last November. And worries over Italy's borrowing costs also raised alarm, pushing the Italian 10-year bond above 6 percent.

Meanwhile, investors continue to hold their breath until Friday’s jobs data are released.

In corporate news Facebook has received notice that U.S. antitrust regulators will give its proposed purchase of the popular photo-sharing app maker Instagram a lengthy investigation. The social media website’s share price plunged almost 10 percent in the previous session. Facebook shares have now fallen 24 percent since it launched on the stock market almost two weeks ago.

Apple CEO Tim Cook said technology for televisions was of "intense interest" but stressed the company's efforts would unfold gradually, amid speculation the iPad and iPhone maker was on the brink of unveiling a revolutionary iTV.

Apple shares edged lower despite an "overweight" rating from Piper Jaffray, which said it expects tablets to overtake sales of notebooks by 2015 and personal computers by 2020.

Meanwhile, Research In Motion has hired bankers for a far-reaching strategic review and to look for partnerships as the BlackBerry maker warned it would likely report an operating loss in the first quarter.

Wynn shares rose after Goldman Sachs upgraded the gaming resort company from "neutral" to "buy."

Pep Boys plunged after the automotive parts and service chain said the sale of the company to private equity firm Gores Group has been canceled.

Stanley Black & Decker is among potential bidders for private equity-owned Infastech, a Singapore-based industrial fastener maker with revenues of more than $500 million, sources with direct knowledge of the matter said.

The first piece of economic news Wednesday offered disappointment for the housing market, with demand for home loans falling even though mortgage rates continued to drop, according to the Mortgage Bankers Association.

Pending home sales for the month of April are also released at 10 a.m. with economists telling Reuters they expect a 0.1 percent rise compared with a 4.1 percent rise in the previous month.

Coming Up This Week:

WEDNESDAY: Pending home sales; Earnings from TiVo
THURSDAY: Challenger job-cut report, ADP employment report, GDP, jobless claims, Fed's Pianalto speaks, corporate profits, Chicago PMI, oil inventories, chain-store sales, Zipcar shareholders mtg; Earnings from Joy Global
FRIDAY: Non-farm payrolls, personal income & outlays, ISM mfg index, construction spending, auto sales, Wal-Mart shareholders mtg

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