Stocks set to open lower on renewed Europe fears
Wall Street was set to open lower on Wednesday after a sharp market rally in the previous session, as investors focused again on Europe's debt problems.
European bank shares dropped on concerns a tight credit market will make it expensive for them to raise capital and for euro-zone countries to refinance debt. The STOXX Europe 600 banking Index <.SX7E> fell 2.9 percent. <.EU>
Italy's biggest bank UniCredit
And in a sign of how wary European banks are of lending to each other, commercial lenders' overnight deposits at the European Central Bank hit a new record high of 453 billion euros, data showed.
A huge sovereign refinancing cycle is kicking off in the region this quarter, and traders are worried debt-laden countries such as Italy and Spain may have to pay high prices to meet their needs.
After ushering in the New Year on a high note, the bulls are poised to take a breather this morning (as) Europe has once again emerged as a focal point, said Andrea Kramer, analyst at Schaeffer's Investment Research in Cincinnati, Ohio.
But some analysts were hopeful investors will again shift their focus to economic data in the United States, which has been signaling the recovery was gaining steam.
The momentum is still to the upside, and economic data will be the main theme as we get through the first month of the year, said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
Data on November factory and durable goods orders are due at 10 a.m. EST, with economists in a Reuters survey expecting factory orders to rise 1.7 percent, compared with a 0.4 percent drop in October.
S&P 500 futures fell 5.3 points and were 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 lost 37 points, and Nasdaq 100 futures were off 4.75 points.
The U.S. Federal Reserve, in a move that could push back expectations of when near-zero U.S. interest rates will rise, will begin publishing its policymakers' forecasts for borrowing costs.
Republican presidential hopeful Mitt Romney squeaked out a victory in Iowa's first-in-the-nation nominating contest on Tuesday as former U.S. senator Rick Santorum rode to a surprise second-place finish.
In company news, AT&T Inc
Eastman Kodak Co
U.S. investors pushed shares higher on Tuesday to begin the new year, with the broad S&P 500 index closing at its highest since late October.
(Reporting By Angela Moon; editing by Jeffrey Benkoe)
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