US futures dip as European situation deteriorates

AP News
Posted: Sep 26, 2012 8:44 AM
US futures dip as European situation deteriorates

NEW YORK (AP) — U.S. stock futures slid Wednesday as the European economic crisis devolved into social unrest in the most vulnerable countries, such as Greece and Spain.

Signaling a broader instability in the region, Germany failed to raise sufficient bids for the country's benchmark 10-year bonds Wednesday as a rush for safe havens in a "very volatile market environment" drove average yields down to 1.52 percent.

Dow Jones industrial futures fell 19 points to 13,386. The broader S&P futures gave up 2.7 points to 1,434.50. Nasdaq futures slid 7.5 points to 2,795.75.

Developments in Europe overshadowed what is expected to be more evidence Wednesday of a U.S. housing market on the rebound.

The Commerce Department releases its new home sales report at 10 a.m. Eastern, and economists believe that sales likely rose again in August.

Sales of previously occupied homes jumped in August to the highest level since May 2010. Builder confidence is at a six-year high and construction of single-family homes rose last month to the fastest annual rate in more than two years. However, even with the gains, home sales and construction remain well below what could be considered healthy levels.

And the fear is that a broader recession in Europe could lead to a stall in whatever economic recovery is occurring in the U.S., where the housing market has been a major drag for five years.

Tens of thousands of protesters have taken to the streets in Athens and Madrid, where they clashed with riot police ahead of a new round of spending cuts and tax hikes.

Police in Athens used tear gas and pepper spray during violent protests that broke out near the country's parliament. Protesters also set fire to trees in the National Gardens. About 50,000 people marched in central Athens on Wednesday, kicking off a general strike against new austerity measures.

The Bank of Spain warned Wednesday that the country is in a deep recession, one day after protests in Madrid led to at dozens of arrests. At least 64 people were injured.

In the aftermath of the chaos that erupted Tuesday, the central bank of Spain said country's economy continues to shrink "significantly." The main IBEX index in Madrid tumbled 2.6 percent.

Poland said Wednesday that its jobless rate had risen to 12.4 percent by the end of August, compared with 12.3 percent in July, further signs that the economic distress is spreading.

Germany's DAX fell 1.4 percent lower to 7,322 while the CAC-40 in France dipped 1.9 percent to 3,447. The FTSE 100 index of leading British shares fell 1 percent to 5,803.