U.S. Stock futures fell again on Tuesday as troubles in the euro zone continue to spook investors. Europe’s ability to handle its debt crisis sent Italian bond yields back into the danger zone.
In the U.S. markets, the S&P 500 futures fell 14.9 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures slid 114 points, and Nasdaq 100 futures lost 23 points. The blue-chip Dow index dropped 0.6% on Monday, posting its first decline in three trading days, pressured by worries in Europe.
The Stoxx Europe 600 fell 1.5% in early trading, adding to the previous session’s drop. In Asian markets overnight, Tokyo’s Nikkei 225 closed down nearly 1%. The yield on Italy’s 10-year benchmark bond leaped above 7%. Bond prices in other European nations also rose sharply. In France and Austria, yields on the benchmark 10-year both hit 3.6%. Also, yields on 10-year Spanish government bonds surged 17 basis points to 6.25%.
“We remain in a fragile situation where without the ECB the euro-area bond markets as we know them could collapse within days, and where if they suddenly decided to step up operations they could give the market a huge lift,” Deutsche Bank analysts wrote in a morning note. No doubt, the European situation is on the edge of a cliff.
Data showed that the economy of the 17 nation euro zone grew 0.2% in the third quarter from the preceding three months, matching forecasts. Gross domestic product in Germany, the biggest economy in the euro zone, rose 0.5% in the third quarter compared with the second quarter.
In the currency markets, the euro dropped 0.6% against the dollar to $1.3540. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, rose 0.5% to 77.892.
Gold futures for December delivery dropped $14.20 to $1,764.20 an ounce in electronic trading on Globex.