MarketWatch.com - Pre-Market Indications

Thursday, February 25, 2010

Indications: U.S. stock futures drop amid cautious tone

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By Steve Goldstein, MarketWatch

LONDON (MarketWatch) -- U.S. stock futures weakened Thursday as markets took a cautious tone ahead of the second day of testimony from Federal Reserve Chairman Ben Bernanke and the release of economic data.

S&P 500 futures fell 6.7 points to 1,096.90 and Nasdaq 100 futures fell 10.5 points to 1,803.50. Futures on the Dow Jones Industrial Average dropped 50 points.

U.S. stocks climbed Wednesday as Bernanke soothed markets by repeating a low interest rate pledge, sending the Dow Jones Industrial Average up 91 points, the Nasdaq Composite up 22 points and the S&P 500 up 10 points.

The second day of Bernanke testimony will draw attention, as will weekly jobless claims and durable-goods-orders data for January due at 8:30 a.m. Eastern time.

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Meanwhile, Greece was still in the spotlight as Standard & Poor's during Wednesday's session threatened the nation was on the verge of junk status within a month, while Moody's said it would keep the rating unchanged if promised spending cuts by the government are enacted.

The Greek jitters sent investors away from the euro /quotes/comstock/21o!x:seurusd (CUR_EURUSD 1.35, -0.01, -0.43%) , which fell to the low $1.35 area, and to government bonds, which rose in both the U.S. and Germany.

"The warnings from the credit agencies highlight the lack of an explicit E.U. backstop facility for Greece if market pressures intensify within the current impossibly difficult timeframe for the Greek government," said Lena Komileva, head of G7 market economics for Tullett Prebon in London.

"Since the lack of a backstop facility for Greece explicitly links the euro to Greek policy risk, the market's appetite for cyclical trades has shifted from the axis of the Fed's ample liquidity provision to the tangent of credit quality at risk along the euro-zone periphery."

Europe stocks, however, wavered between gains and losses, after a number of forecast-beating results from companies including the Royal Bank of Scotland /quotes/comstock/13*!rbs/quotes/nls/rbs (RBS 11.13, +0.13, +1.18%) and Aegon /quotes/comstock/13*!aeg/quotes/nls/aeg (AEG 5.92, +0.09, +1.54%) . See related Europe Markets.

In the U.S., Coca-Cola /quotes/comstock/13*!ko/quotes/nls/ko (KO 55.16, +0.33, +0.60%) announced a deal to buy Coca-Cola Enterprises /quotes/comstock/13*!cce/quotes/nls/cce (CCE 19.18, -0.09, -0.47%) North American bottling operations in a deal that's "substantially cashless."

Coca-Cola Enterprises shot up nearly 30% in pre-market trade. Coca-Cola fell 1%.

Asian markets generally slipped, with the Nikkei 225 down 1% in Tokyo and the Hang down 0.3% in Hong Kong.

Oil futures were below $80 a barrel and gold was below $1,100 an ounce.

Steve Goldstein is MarketWatch's London bureau chief.


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