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Published: Monday, 6/20/2011

Worries about a possible Greek default, drag down U.S. stock futures

ASSOCIATED PRESS
A Greek default would trigger losses for the banks that hold Greek bonds, and economists worry it could affect the global economy. A Greek default would trigger losses for the banks that hold Greek bonds, and economists worry it could affect the global economy.
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NEW YORK — U.S. stock futures pointed to a lower opening Monday as worries about Europe’s debt problems continue to fester.

Euro-area finance ministers failed to agree to release more bailout money to Greece, which needs cash to avoid defaulting on its debt. In order to get it, Greece must first agree to further cut its deficit. Such moves have been unpopular in Greece, and its government faces a vote of confidence on Tuesday.

A Greek default would trigger losses for the banks that hold Greek bonds, and economists worry it could shake the European economy.

Greece has been at the center of Europe’s debt worries, but other countries are also facing troubles. Moody’s warned on Friday that it may cut Italy’s credit rating because of its mounting debt and sluggish growth prospects.

The worries dragged down markets across Europe Monday: Italy’s FTSE MIB index sank 2.7 percent, France’s CAC 40 index dropped 1.3 percent and Germany’s DAX index fell 1.2 percent.

European debt problems, combined with weakening economic data, have dragged the S&P 500 index of U.S. stocks down 6.7 percent since April 29. Crude oil’s price has also tumbled on worries about lower global demand. It dropped below $92 per barrel to its lowest point since February.

Strong corporate earnings have helped drive stocks higher over the last two years, and analysts expect more growth for the April-through-June quarter. But Nabors Industries Ltd., a driller for oil and gas, warned that its international and pressure pumping businesses have been weaker than expected during the quarter. Its stock lost 3.2 percent in pre-market trading.

PNC Financial Services Group Inc. fell 0.9 percent in pre-market trading after it said it will buy the U.S. retail operations of Royal Bank of Canada for $3.45 billion. The deal will make PNC the fifth biggest U.S. bank with 2,870 branches. It follows Capital One Financial Corp.’s $9 billion purchase last week of ING’s U.S. online bank.

The yield on the 10-year Treasury note fell to 2.92 percent as investors sought out the relative safety of U.S. debt. A bond’s yield falls when its price rises. The 10-year yield had been as high as 3.74 percent in February.

Ahead of the opening bell, Dow Jones industrial average futures fell 50 points, or 0.4 percent, to 11,888. S&P 500 futures fell 6, or 0.5 percent, to 1,260. Nasdaq 100 futures fell 9.25, or 0.4 percent, to 2,181.

Stock futures do not always accurately predict how prices will change once the market opens.



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