U.S. stock index futures pared their losses Wednesday after a report on consumer prices.
Consumer prices slipped 0.1 percentin April and were flat excluding volatile food and energy costs. This came after the Labor Department reported Tuesday that the producer price index rose 0.2 percent last month.
Mortgage applications tumbled more than 27 percentto their lowest level since May 1997 as the government stimulus expired.
Futures had been down much more sharply earlier amid worries about curbs on trading by Germany and plans to do so by the U.S.
The dollar hit a four-year high against the euro Wednesday after Germany banned naked short selling of some securities.
Major markets in Europe were down more than 2 percent. Asian stocks lost ground on the back of regulatory news as well, with Japan's Nikkei average falling 0.5 percent to a nearly three-month closing low.
Treasury Secretary Geithner told CNBC Tuesday that he had strong confidence in Europe. Referring to the current debt crisis, Geithner said "Europe has the capacity to manage through this." The main concern is if Europe could '"follow through with proposed financial reform and their rescue plan announced last week.," Geithner said.
Meanwhile, White House Economic Advisor Paul Volcker said Europe's debt crisis shows the risks for the United States if it does not get its budget deficit under control.
Elsewhere, the Securities and Exchange Commission released proposed new rules on single stock trading.
As expected, there are plans to pause trading in a stock across U.S. markets for five minutes if that stock experiences a 10 percent change in price over the preceding five minutes.
Regulators have still not been able to pinpoint the cause of the Dow Jones's massive drop on May 6th.
And Senate Majority Leader Harry Reid said on Tuesday that Republicans will vote with Democrats to wrap up debate on a sweeping rewrite of U.S. financial regulation and move toward final passage.
Companies expected to announce earnings on Wednesday ahead of trading include Target , Polo Ralph Lauren , Deere and Hormel Foods .