MADRID (MarketWatch) — U.S. stock futures fell on Tuesday, tracking losses across global markets after the Bank of Japan disappointed some market watchers by holding its policy steady, and worries about Federal Reserve tapering continued to haunt the market.
A handful of U.S. data numbers are due, including job openings and wholesale inventories.
Global stocks were also rattled as a German constitutional court began to consider the legality of the European Central Bank’s pledge last year to buy the government bonds of weaker euro-zone countries to prevent the single currency from breaking up.
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Deep in negative territory, futures for the Dow Jones Industrial Average (CBE:DJM3) fell 115 points, or 0.8%, to 15,113, while those for the Standard & Poor’s 500 index(GLC:SPM3) fell 14.80 points, or 0.9%, to 1,627.30. Futures for the Nasdaq 100 index(GLC:NDM3) fell 24.50 points, or 0.8%, to 2,962.50.
“Equity markets continue to push lower amid a wide range of disappointing factors,” said Mike McCudden, head of derivatives at Interactive Investor. “The Fed will call time on bond buying at some point, Chinese economic data is showing further signs of a slowdown, and the Bank of Japan continues to — in the mind of many traders — punch below its potential.“
Along with Asia and Europe stocks, the dollar fell sharply against the Japanese yen after the Bank of Japan decided to stay put on its policies, dashing some hopes that the central bank would extend the duration on its ultra-low-interest rates to banks. The dollar (ICAP:USDJPY) sank to ¥97 from a level of ¥98.64 seen late Monday in North America.
Henrik Drusebjerg, senior strategist with Nordea Bank, said there is also some delayed reaction to disappointing weekend export numbers from China. “If we really should believe in equity markets going up from now, it’s extremely important that we see global growth, otherwise it’s not very likely corporates will be able to raise their earnings,” he said.
On Tuesday, the National Federation of Independent Business said small-business sentiment rose in May to the highest level in a year. Later on Tuesday, the Labor Department will release job openings data for April at 10 a.m. Eastern Time, while the Commerce Department will publish wholesale inventories for May at that time as well.
Within that data, the job openings numbers will likely draw the most attention as Federal Reserve Vice Chair Janet Yellen has said it’s one of the indicators she’s watching for signs of a labor improvement.
Wall Street stocks finished Monday’s session little changed after Standard & Poor’s revised its U.S. credit-rating outlook to stable from negative. In choppy trading, the Dow Jones Industrial Average (DJI:DJIA) finished down 9.53 points, or 0.06%, to 15,238.59. The S&P 500(SNC:SPX) dipped 0.57 point to end at 1,642.81.
Drusebjerg said in places like China, stocks are beginning to look quite cheap, but globally stocks are at fair value. “Given that we’ve now seen two years of increasing equity prices and stable-to-slightly-decreasing earnings in corporates, it has made equity markets overall close to fair value,” he said.
Within corporate news, shares of Dole Food Co. (NYSE:DOLE) jumped 18% in premarket trading after David H. Murdock, the company’s chairman and CEO, made a bid for the rest of Dole. Murdock controls almost 40% of Dole Food, and the $12-per-share cash offer represents an 18% premium to Dole Food’s closing price on Monday of $10.20 per share.
Mario Draghi, ECB President
Shares of Lululemon Athletica Inc. (NASDAQ:LULU) tumbled 14% in premarket trading after the yoga clothing retailer announced quarterly results the prior day and said its Chief Executive Officer Christine Day will step down.
U.S. investors will be keeping an eye on Germany on Tuesday, where the country’s supreme court will be scrutinizing whether ECB President Mario Draghi was within his legal limits when he last year announced a new policy — Outright Monetary Transactions — where the bank could buy bonds to keep a euro-zone government and the euro from collapse.
“The primary fear is that (OMT) could be capped to a certain amount and that would definitely hurt Draghi’s words when he said, ‘We will do whatever it takes’,” Drusebjerg noted.
Losses built for Europe stocks throughout the morning, with the Stoxx Europe 600 index(STX:XX:SXXP) dropping 1.6%.
Asia stocks fell after that no-change stance from the Bank of Japan, with the Nikkei Stock Average (TYO:JP:NIK) closing down 1.5%. Nikkei futures were pointing to losses of 4%.
Gold also fell sharply, and other precious and base metals followed suit. Gold for August delivery (CNS:GCM3) dropped $12.80, or 1%, to $1,373.30 an ounce