Futures on the Dow Jones Industrial Average reversed early gains to fall 66 points to 11,972. S&P 500 Index futures declined 9.40 points to 1,244.70, while Nasdaq 100 futures lost 9 points to 2,350.75.
Although improving economic data in the United States points to better times ahead, the worry over the European sovereign debt crisis continues to drag stock futures down. Investors are jittery, sitting on a wobbly fence, wondering if the whole European mess is going to right itself or all come crashing down.
European equities and U.S. stock futures gave up early gains after the Bank of England’s latest quarterly Inflation Report sent out warning bells that a failure by policy makers to respond adequately and quickly to the euro-zone debt crisis “would have significant, adverse consequences for the world and U.K. economies.” Europe is the Unites States second largest trading partner.
The European Central Bank bought euro zone government bonds to stop a sell-off, traders said. Equities rose on the move but then lost ground as the yield on Italian 10-year bonds continued to hover near 7%. The yield spread of 10-year French government bonds over their German equivalents widened to a euro-era high on fears the debt crisis was starting to move to economies, once thought to be isolated from the debt problems.
Economists are warning if Europe does not get a hold of this crisis immediately, the recession that region is experiencing will grow worldwide. Bank of Japan Governor Masaaki Shirakawa said the crisis was already affecting emerging nations and Japan in multiple ways, while the Bank of England forecast Britain was on the brink of a contraction.
European blue chips rose 0.53% to 2,266, the English FTSE 100 fell 0.13% to 5,510 and the German DAX slipped 0.24% to 5,919.
In Asia, the Japanese Nikkei 225 slid 0.92% to 8,463 and the Chinese Hang Seng plummeted 2% to 18,961.
The benchmark crude oil contract traded in New York fell 14 cents, or 0.14%, to $99.20 a barrel. Wholesale RBOB gasoline climbed 4 cents, or 1.5%, to $2.62 a gallon.
In metals, gold fell $5.90, or 0.31%, to $1776 a troy ounce.