Futures point to lower open on Greece concerns
Oct 3, 2011, 6:13 a.m.
By Ryan Vlastelica
NEW YORK (Reuters) - Stock index futures pointed to a lower open on Monday as concerns over Greece's teetering finances returned to the forefront and after equities suffered their worst quarter since 2008.
Greece will miss its deficit targets for both this year and next despite harsh new austerity measures, draft budget figures showed, and could be forced to seek more bailout funds.
The draft budget brought the specter of a Greece default closer and will weigh as euro zone finance ministers meet to discuss the next steps toward resolving the currency area's sovereign debt crisis.
"This news is disappointing but not surprising," said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York. "While I think they will get additional help if needed, there remains a lot of uncertainty over how much more money could be provided as well as the framework for a possible deal."
S&P 500 futures fell 7.1 points and were slightly 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 71 points, and Nasdaq 100 futures took off 20.5 points.
European shares were down 1.9 percent and the STOXX Europe 600 Banks index fell 2.8 percent. U.S.-listed shares of Barclays Plc dropped 1.9 percent to $9.59 in premarket trading.
U.S. banks with exposure to European banks will also be under the microscope. Morgan Stanley was 1.1 percent lower at $13.36.
Gold, viewed as a hedge in times of risk, climbed 2.3 percent and was headed for its largest one-day rise in nearly a month.
Concerns over Europe's sovereign debt problems have pressured U.S. equities recently, and contributed to Wall Street's worst quarter since the depths of the financial crisis in 2008.
The S&P 500 index lost more than 14 percent last quarter and over 7 percent in September alone.
Pursche said that given recent losses, equities may not suffer the same kind of recent dramatic selloff caused by Europe.
"We believe the selloff is overdone," he said. "Having said that, investors need to stay careful. There's still so much risk that even though financial stocks are cheap, for example, they still have room to fall."
Yahoo Inc rose 4 percent to $13.70 premarket. The founder and chief executive of Chinese e-commerce giant Alibaba said Friday he was keen to buy the company and has talked with other potential buyers about options.
Investors looked ahead to September data on manufacturing from the Institute for Supply Management, seen at 50.5 versus 50.6 last month. The data is due at 10 a.m. EDT. September vehicle sales are also on tap.
On the upside, Eastman Kodak Co surged 36 percent to $1.06 before the bell after losing half its value on Friday. The photography company has hired a law firm specializing in bankruptcy, triggering speculation it could file. Kodak denied it has a bankruptcy plan.
U.S. stocks fell more than 2 percent on Friday as weak economic data from China sparked fears of a global economic slowdown while Morgan Stanley plummeted on concerns about its exposure to European banks.
(Editing by Jeffrey Benkoe)