via marketwatch.com
Wednesday, May 23, 2012
U.S. Stock Futures Slide; CBO Warns of Possible Recession - Bloomberg
U.S. stock futures fell as the Congressional Budget Office said America’s economy would slip into recession if necessary budget measures aren’t taken and concern mounted that Greece will leave the euro area.
Dell Inc. (DELL) plunged 13 percent in German trading after the company forecast fiscal second-quarter revenue that missed analysts’ estimates. Morgan Stanley (MS) dropped after a Massachusetts regulator subpoenaed the investment bank over its handling of Facebook Inc. (FB)’s initial public offering.
May 23 (Bloomberg) -- U.S. stock-index futures declined as European leaders prepared to meet in Brussels and data showed Japan’s exports grew slower than estimated. (Source: Bloomberg)
Standard & Poor’s 500 Index futures expiring in June declined 0.8 percent to 1,304.5 at 6:43 a.m. in New York. Dow Jones Industrial Average futures expiring the same month lost 90 points, or 0.7 percent, to 12,387.
“Uncertainty surrounding Greece’s membership in the euro and possible contagion into other countries plagued by high deficits just isn’t going away, at least not until Greek elections have taken place on June 17th,” said Markus Huber, head of German sales trading at ETX Capital in London.
Stocks erased gains in the final hour of trading yesterday after former Greek Prime Minister Lucas Papademos said while it is unlikely the Mediterranean nation will leave the euro, it remained a risk, the Wall Street Journal reported.
The leaders of the European Union meet in Brussels today to discuss the sovereign-debt crisis that has wiped about $4 trillion from equity markets worldwide this month.
Japan’s exports in April trailed economists’ estimates, underscoring the risk that weakness in global demand may limit the recovery in the world’s third-biggest economy. In Japan, exports grew 7.9 percent last month from a year earlier. That fell short of the median estimate for an 11.8 percent gain in a Bloomberg News survey.
‘Fiscal Cliff’
The U.S. economy will probably tip back into recession next year if Congress fails to address an impending “fiscal cliff,” the Congressional Budget Office said.
The nonpartisan agency said in a report yesterday that the economy would contract at an annual rate of 1.3 percent in the first half of 2013 if lawmakers allow the George W. Bush-era tax cuts to expire as scheduled and $1.2 trillion in government spending cuts to take effect in January.
Separately, a Commerce Department report at 10 a.m. in Washington may show that new-house sales in the U.S. rose to 335,000 in April from 328,000 in March, according to a Bloomberg survey of economists.
Dell, Morgan Stanley
Dell tumbled 13 percent to $13.14 in German trading. Round Rock, Texas-based Dell predicted sales for the period ending in July of $14.7 billion to $15 billion. That compared with the average $15.4 billion analyst estimate compiled by Bloomberg.
Hewlett-Packard Co. (HPQ) dropped 1.6 percent to $21.43 in Germany. The world’s largest personal-computer maker will report results today after the market closes.
Morgan Stanley fell 1.1 percent to $13.17 in Germany. The lead underwriter of Facebook’s IPO released a statement defending its handling of the share sale after the Massachusetts security division yesterday subpoenaed the investment bank over its communications with clients. The U.S. Securities and Exchange Commission and the brokerage industry’s watchdog both said they may review the offering.
Facebook slid 1.8 percent to $30.44 in early New York trading. The shares have plunged 18 percent over the three days since the second-largest IPO in U.S. history.
Analog Devices Inc. (ADI) fell 3.1 percent to $34.70 in late trading in New York. The company forecast third-quarter earnings-per-share of 54 cents to 58 cents. Analysts had estimated 58 cents.
PetSmart Inc. (PETM) surged 9.7 percent to $61 in late trading as the company beat first-quarter earnings estimates and increased its full-year forecast.
To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
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