MarketWatch.com - Pre-Market Indications

Friday, November 26, 2010

Indications: U.S. futures fall sharply after holiday break

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By Simon Kennedy and Nick Godt, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures dropped Friday following the Thanksgiving holiday, as worries over sovereign debt in Europe and tensions between North and South Korea persist while investors awaited news on retailers’ Black Friday sales.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\z10 (DJZ10 11,070, -85.00, -0.76%)  fell 90 points to 11,065 and S&P 500 futures /quotes/comstock/21m!f:sp\z10 (SPZ10 1,187, -9.30, -0.78%)  dropped 10.80 points to 1,185.70 ahead of the holiday-shortened trading session.

Nasdaq 100 futures /quotes/comstock/21m!f:nd\z10 (NDZ10 2,153, -5.00, -0.23%)  slumped 17.50 points at 2,140.50.

The decline for stock futures came as European stock markets posted another day of losses. Spanish stocks in particular fell heavily, with the IBEX 35 index dropping 2.6% as investors continued to worry about the possibility of sovereign-debt contagion to Portugal and Spain.

Shares in Spanish bank BBVA SA /quotes/comstock/13*!bbva/quotes/nls/bbva (BBVA 10.34, -0.32, -3.00%)  dropped 4.5% and Banco Santander SA /quotes/comstock/13*!std/quotes/nls/std (STD 10.03, -0.46, -4.39%)  fell 5.5% in pre-opening trade.

“Europe is a big part of the fall [for futures] because it’s rattling the bank sector, which is where the risk lies to the global economy,” said Mike Lenhoff, chief strategist at Brewin Dolphin. Also, concerns over tension between North and South Korea are growing again, he noted.

“If the market wants to focus on the downside, there’s plenty to keep them going,” Lenhoff said.

Among U.S. banking stocks, shares in Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 4.12, -0.05, -1.15%)  dropped 1% in premarket trading.

Black Friday survival checklist

Crowded stores, long lines and increased online traffic make Black Friday one of the most challenging shopping days of the year.

Friday’s decline came after U.S. markets rallied Wednesday, with the Dow index /quotes/comstock/10w!i:dji/delayed (DJIA 11,103, -84.35, -0.75%)  closing up 1.4% in thin pre-holiday trading following data that showed falling jobless claims and rising consumer confidence.

With no economic data due Friday, retail stocks are likely to be closely watched as investors look for any early snippets of news on retailers’ Black Friday sales.

Shares in Amazon.com Inc. /quotes/comstock/15*!amzn/quotes/nls/amzn (AMZN 177.54, +0.29, +0.16%) , eBay Inc. /quotes/comstock/15*!ebay/quotes/nls/ebay (EBAY 31.24, +0.03, +0.10%)  and Target Corp. /quotes/comstock/13*!tgt/quotes/nls/tgt (TGT 56.93, -0.32, -0.56%)  could all be in focus after rising strongly on Wednesday.

Analysts at Jefferies & Co. gave one early indication on the sales after a midnight trip to an outlet center to asses demand.

“Midnight madness checks showed consumers have come to shop yet again following last year’s strength. Traffic was strong and promos contained for the second year in a row,” the broker said.

Other stocks in focus could include New York Times Co. /quotes/comstock/13*!nyt/quotes/nls/nyt (NYT 9.06, -0.04, -0.44%)  after hedge fund Harbinger Capital cuts its stake in the publisher to 2.6%. In October the fund had said it held 7.4% of the company.

The dollar also rose against the euro as sovereign worries remained. The euro dropped 1% to $1.3213.

Oil and gold futures were also lower as the dollar strengthened.

Asian markets closed lower. Korea’s KOSPI index dropped 1.3% after North Korea reportedly warned that further naval exercises by the U.S. and South Korea will bring the region closer to war.

Simon Kennedy is the City correspondent for MarketWatch in London. Nick Godt is MarketWatch's markets editor, based in New York.

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