In the Headlines
U.S. stock futures again followed Europe's lead on Tuesday, and it was not in a bullish direction. Wall Street was poised for a sharply lower open.
Selling on the major indices intensified in the final two hours of Monday's session, on news that Greece would hold a referendum on the European Union plan for slashing the nation's debt. Greece's prime minister says he needs wider political support for austerity measures required by the debt deal.
The S&P 500 fell 2.5% in heavy volume Monday, slashing its 200-day moving average.
This morning's downside futures trade also precedes some closely watched economic news, and the start of a two-day Federal Reserve policy meeting. That confab will be capped off by a press conference by Fed Chief Ben Bernanke tomorrow.
European stocks traded sharply lower ahead of Wall Street's bell. Financials were some of the biggest losers. Credit Suisse (CS) plunged in Swiss trade, following news that it would eliminate 1,500 jobs and reduce operations in its investment banking unit in an effort to cut costs.
In Asia, financials and resources-related stocks led indices lower. Shanghai bucked the regional trend, ending Tuesday's session fractionally higher. Transports were among gainers, as Beijing committed more money to railroad construction. The industry has suffered since a much publicized fatal high-speed train accident in July, which cast doubt on the nation's ability to safely expand its rail infrastructure.
Closer to home, the October manufacturing index from the Institute for Supply Management (ISM) is due out at 10 a.m. EDT. Economists see a small bump up from last month, to 52. This index is survey of purchasing managers, so it gauges sentiment rather than actual activity. Nonetheless, it's closely watched and has potential to affect stocks -- on days when the entire market isn't fixated on Europe, that is.
Also at 10 a.m. the Commerce Department is scheduled to release the numbers on construction spending. The September data are expected to show an increase of 0.3%.
Because it's the first day of the month, auto makers will release their October sales figures throughout the day. There are no consensus forecasts, but auto industry researcher Edmunds has forecast sales of 1 million vehicles. However, analysts do not expect a longer-term trend of better sales.
As the Federal Open Market Committee (FOMC) begins its two-day meeting, economists expect it to keep key interest rates unchanged, and to update its economist forecast. The Fed is expected to slash its growth outlook and lifting its inflation outlook. Of course, when Bernanke speaks tomorrow, there will be close attention to any signals about further quantitative easing.
Gold, which slumped on Monday, added to the decline in early electronic trade. It fell $22.10 to $1,703.10 per ounce.
Crude oil also showed a decline. West Texas Intermediate crude was down $2.45 per barrel, to $90.74.
Before today's open, DJIA component Pfizer (PFE) said third-quarter earnings were $0.62 a share, ahead of expectations for $0.56. Revenue also beat, coming in at $17.2 billion, vs. estimates of $16.42 billion. The company reaffirmed its 2012 guidance.
Analysts have been closely monitoring the company's plans for new products to replace revenue lost as blockbuster cholesterol drug Lipitor goes generic. Pfizer advanced $0.09, 0.47%, to $19.35 in early trade.
After the bell, natural food maker Hain Celestial (HAIN) packages up its fiscal first-quarter results. It's expected to earn $0.28 per share on sales of $288.6 million.
Year-over-year sales growth has accelerated in the past three quarters. The stock has been consolidating price gains since retreating from a ten-and-a-half-year high in May. It advanced 9.9% in October, and is holding above key moving averages.
Steel stocks were among big decliners Monday on signs of weakening global demand. U.S. Steel (X) skidded $1.36, 5.36%, to $24 ahead of Tuesday's open.
Also dropping like a rock in the premarket was iron ore miner Cliffs Natural Resources (CLF), shedding $3.22, 4.72%, to $65. Iron ore is a component in the steel-making process.
Cannacord initiated coverage on one semiconductor name and downgraded another.
ARM Holdings (ARMH) was started with a rating of Hold. The U.K.-based designer of chips for wireless gear said this morning it would acquire California's Prolific, a privately held maker of software for integrated circuit manufacturing. Terms of the deal were not disclosed. ARM shares fell $1.23, 4.38%, to $26.86 in the premarket.
Meanwhile, Cannacord downgraded graphics chip maker Nvidia (NVDA) to Hold from Buy. Nvidia shares rose 18% in October's market rally, following four months in a row of declines.