U.S. stock futures sank as investors awaited reports that may show jobless claims rose and leading economic indicators fell and Sweden’s financial regulator said banks are unprepared for a freeze in money markets.
JPMorgan Chase & Co. (JPM) and Morgan Stanley fell in early New York trading as the Wall Street Journal said U.S. regulators are stepping up scrutiny of European banks’ local operations on concern that the region’s sovereign debt crisis may lead to funding problems. NetApp Inc. (NTAP) tumbled 14 percent after the maker of data-storage products reported first-quarter earnings that missed analyst estimates.
Standard & Poor’s 500 Index futures expiring in September slid 1.9 percent to 1,167.1 at 10:38 a.m. in London. Dow Jones Industrial Average futures retreated 185 points, or 1.6 percent, to 11,196.
The S&P 500 rose as much as 28 percent after Federal Reserve Chairman Ben S. Bernanke foreshadowed on Aug. 27 of last year a second round of so-called quantitative easing. The central bank finished the program of asset purchases at the end of June. Bernanke may announce policy intentions at a conference in Jackson Hole, Wyoming, on Aug. 26.
“Economic data hasn’t been that great,” said Louis de Fels, a Paris-based money manager at Raymond James Asset Management International, which oversees $30 billion worldwide. “Recovery isn’t as strong as expected. The market will remain uncertain until Jackson Hole.”
Fed Officials
Most U.S. stocks declined yesterday, wiping out an earlier advance, as Dell Inc. forecast weaker sales and two Federal Reserve officials expressed concern about the amount of stimulus being applied to the economy. The S&P 500 has fallen 12 percent from a three-year high on April 29 on concern about Europe’s debt crisis and an economic slowdown.
A report at 8:30 a.m. in Washington may show the number of new U.S. job seekers applying for unemployment insurance rose by 5,000 to 400,000 in the week ending Aug. 13, according to a Bloomberg survey of economists.
Separate releases at 10 a.m. may show that sales of previously owned houses climbed to a 4.9 million annual pace in July from a seven-month low in June and the Conference Board’s index of leading U.S. indicators grew 0.2 percent last month after a 0.3 percent gain the prior period.
Economists also forecast the Federal Reserve Bank of Philadelphia’s general economic index declined to 2 this month from 3.2 in July. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
Banks Fall
JPMorgan, the second-biggest U.S. bank by assets, lost 0.9 percent to $36.25 in early New York trading. Morgan Stanley (MS) slid 0.6 percent to $16.90.
The Journal reported that U.S. regulators are stepping up scrutiny of local operations for Europe’s largest banks on concern that the region’s sovereign debt crisis may lead to funding problems. The Federal Reserve Bank of New York has been holding talks with the lenders and sought information about their access to funds to maintain operations in the U.S., the newspaper said, citing people it didn’t identify.
Swedish banks must do more to prepare for a deterioration in Europe’s debt crisis that could freeze interbank markets and cut off funding, said Lars Frisell, chief economist at the country’s financial regulator.
‘Everything Will Freeze’
“It won’t take much for the interbank market to collapse,” Frisell said yesterday in an interview in Stockholm. “It’s not that serious at the moment but it feels like it could very easily become that way and that everything will freeze.”
NetApp sank 14 percent to $35.98 in Germany. The data- management company reported first-quarter earnings excluding some items of 55 cents a share, less than the average analyst estimate of 56 cents a share. The stock was cut to “market perform” from “outperform” at William Blair & Co.
Gap Inc. (GPS), the largest U.S. apparel chain, and Hewlett- Packard Co., the world’s biggest computer maker, are among companies scheduled to report earnings today.
Abercrombie & Fitch Co. (ANF), the teen-clothing retailer, advanced 1.8 percent to $66.05 in Germany as the shares were raised to “outperform” from “neutral” at Robert Baird.
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