NEW YORK (MarketWatch) -- The U.S. stock market on Friday braced for opening losses as worries mounted over the impact of economic cost-cutting measures in Europe, while the euro fell to a 17-month low and gold resumed its rise.
"If Greece, Portugal and others can't generate nominal GDP growth above its cost of funding, they enter a debt death spiral that can only be rescued by debt extinguishment through restructuring which then lays the foundation for future growth," said Peter Boockvar, equity strategist at Miller Tabak.TODAY'S TOP MARKET STORIES
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An April rise in U.S. retail sales did little to curb bearish sentiment on Wall Street, with stock index futures only lightly paring loses on the Commerce Department report. Read more about the 0.4% climb.
S&P 500 futures fell 9.5 points to 1,147.3 and Nasdaq 100 futures dropped 15.50 points to 1,931.75. Futures on the Dow Jones Industrial Average fell 71 points to 10,702.00.
The euro fell below $1.25 for the first time since March 2009, and Spain's IBEX 35 /quotes/comstock/20r!iib (XX:IBEX 9,315, -662.80, -6.64%) dropped 3.6% in Madrid.
Gold prices ran higher, with the futures contract for June delivery lately up $17.20 at $1,246.40 an ounce on the Comex division of the New York Mercantile Exchange.
The metal's rise is "almost an acknowledgement that we can't print out more debt to pay off the current debt to make it better," said Scott Carter, executive vice president at Goldline International.
"I'm not sure why it's suddenly in fashion to know that doesn't make economic sense," said Carter.
U.S. stocks lost ground Thursday on reports of widening legal probes of banks, disappointing traffic from retailers and still-elevated jobless claims.
The Dow Jones Industrial Average, down six of the last eight sessions, dropped 113 points, the S&P 500 fell 14 points and the Nasdaq Composite fell 30 points.
Data released Friday showed core inflation in Spain turning negative for the first time, raising questions about the country's ability to grow out of its massive debt burden. An alleged threat delivered last week by French President Nicolas Sarkozy to pull his country out of the euro also impacted. See story on Spain.See story on euro.
"Four days on from Monday's mega European bailout package the market finds itself pondering the medium-term impact of Europe's massive debt burden," said David Croy, interest rates strategist at ANZ bank in Wellington.
Nordstrom /quotes/comstock/13*!jwn/quotes/nls/jwn (JWN 39.99, -1.30, -3.15%) may see pressure after the retailer missed earnings estimates.
Also on the retail front, J.C. Penney /quotes/comstock/13*!jcp/quotes/nls/jcp (JCP 27.35, -0.82, -2.91%) profit more than doubled to $60 million, or 25 cents a share. See story on J.C. Penney earnings.
Sony's outlook paced a negative day for Asia, with the Nikkei 225 closing 1.5% lower in Tokyo.
Steve Goldstein is MarketWatch's London bureau chief. Kate Gibson is a reporter for MarketWatch, based in New York.