MarketWatch.com - Pre-Market Indications

Thursday, September 30, 2010

Indications: U.S. stock futures fall; AIG outlines plans

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By Polya Lesova, MarketWatch

FRANKFURT (MarketWatch) â€" U.S. stock futures edged lower Thursday, tracking losses in European equities, while American International Group Inc. mapped out its plan to repay all its obligations to U.S. taxpayers.

Investors also digested a barrage of news from Europe. Ireland detailed the soaring cost of bailing out its troubled banking sector, and Moody’s Investors Service downgraded Spain’s credit rating. On the positive side, Germany said the number of its unemployed declined in September.

Markets sanguine about European sovereign woes

Anglo Irish Bank will need more money, and Spain's credit ratings have been downgraded. Never mind, say the markets. The euro has risen and sovereign spreads narrowed, says Dow Jones Newswires' David Cottle.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 10,810, +30.00, +0.28%)  fell 18 points to 10,762.

S&P 500 futures /quotes/comstock/21m!f:sp\z10 (SPZ10 1,144, +3.10, +0.27%)  dropped 2.40 points to 1,138.50, and Nasdaq 100 futures /quotes/comstock/21m!f:nd\z10 (NDZ10 2,015, +6.25, +0.31%)  slipped 3.75 points to 2,005.20.

U.S. stocks ended slightly lower Wednesday, with the blue-chip Dow index /quotes/comstock/10w!i:dji/delayed (DJIA 10,835, -22.86, -0.21%)  falling 0.2%. The Dow, however, is still on track for its best September performance since 1939, according to data from Dow Jones Indexes.

Thursday’s economic calendar is a busy one. Data on weekly jobless claims and the third release of second-quarter gross domestic product are due at 8:30 a.m. Eastern time.

The highlight is likely to come at 9:45 a.m., when the September Chicago purchasing managers index will be released. It will come a day ahead of the closely watched Institute for Supply Management manufacturing index.

After the market opens, Federal Reserve Chairman Ben Bernanke is scheduled to testify on financial regulatory reform in Washington.

Most Asian markets finished lower overnight; in Japan, the Nikkei Stock Average dropped 2%. See Asia Markets report.

In Europe, stock markets also posted losses, with the Stoxx Europe 600 Index /quotes/comstock/22c!sxxp (ST:SXXP 261.58, +0.56, +0.21%)  falling 0.2% in afternoon trading. See Europe Markets report.

”We have seen some fairly good numbers today from the euro zone â€" Germany saw the unemployment rate decline,” said Mads Koefoed, a strategist at Saxo Bank. “These numbers suggest that we still have some sort of recovery going on in Europe.”

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However, “the problem for stocks has been that the last few days have been all about the sovereign debt concerns,” Koefoed said.

Ireland and Spain were once again in the spotlight Thursday.

The Central Bank of Ireland outlined the costs of rescuing its troubled banking sector. It estimated that the total capital required for nationalized Anglo Irish Bank amounts to 29.3 billion euros ($39.8 billion). The Irish government has already injected €26 billion in the bank. Under a stress-case scenario, however, an additional €5 billion of capital could be required.

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