Stock index futures were lower yesterday as worries persisted over euro zone debt and ahead of key data that will indicate the strength of the recovery in the world’s largest economy.
The euro slid to 10-week lows against the US dollar, pressuring metals and other commodity prices, after a weekend rescue package for Ireland did little to stem fiscal concerns and speculators targeted other debt-laden countries.
House prices and consumer confidence data will be in focus as investors look for more signs as the US economic recovery advances.
“The crisis of confidence in Europe can’t be resolved quickly. No single event can put things back in order,” said Rick Meckler, president of investment firm LibertyView Capital Management in New York.
“The floor (in the euro) can only come with some success to their recent steps, and investors are focused (on the euro-equities correlation) right now. But at some point, the economic recovery will be the dominant theme in the US equity markets,” Meckler said.
The 30-day correlation between the euro and the S&P 500, which reached a 2010 high of 0,94 in mid-October, has recently bounced back after turning negative on November 15. It now stands at 0,24.
A higher number means the two are moving in the same direction, and at 1, they are moving exactly in the same direction in the last 30 days.
In recent weeks, the euro and US stocks have been trading in sync with each other.
S&P 500 futures fell 7,6 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures dropped 54 points, and Nasdaq 100 futures lost 14,75 points.
Data due on Tuesday is expected to show home prices fell in September compared to August, while the year-on-year increase is forecast to show a deceleration in price gains.
The S&P/Case-Shiller Home Price Indices, is expected to show a 1,1% rise from a year ago, slower than the 1,7% gain the previous month.
The Conference Board’s index of consumer confidence for November, is expected to show a mild improvement, with economists forecasting a rise to 52,6, from 50,2 in October.
Swiss engineering group ABB will buy US industrial motors firm Baldor Electric company for $3,1 billion, a 41% premium to Baldor’s closing price on Monday.
Baldor shares gained 40,2% to $63,25 in premarket trading.
US stocks fell on Monday but finished well off their lows of the day as the dollar retraced earlier gains and energy and financial stocks rallied late in the session.