Dow to Fall As Worries Multiply
LONDON -- Today's EU leaders' summit is likely to prompt a rough session for the Dow Jones Industrial Average (INDEX: ^DJI) . The futures market suggests the leading index will open sharply lower, continuing falls that started late yesterday afternoon.
Economic data due out today includes April's new-home prices, which are expected to show an improvement on March. The latest FHFA house-price data is also due today, which will provide a more accurate indicator of the direction of house prices across the U.S.
In Europe, Greece is dominating the agenda once more, and reports that former Greek prime minister Lucas Papademos said last night that preparations were being made to leave the eurozone caused a sharp sell-off when European markets opened.
Reduced World Bank growth forecasts for the Asia-Pacific region also dampened sentiment, causing the FTSE 100 (INDEX: ^FTSE) to lose almost 2% by late morning, with resource shares and miners such as Rio Tinto (NYS: RIO) feeling the full force of the sell-off.
Although the outcome of today's EU leaders' summit is keenly anticipated, expectations are low, and the anxiety was reflected in European bond yields. The yield on Spanish 10-year debt rose above 6% once again, while Germany sold its first batch of 0% coupon two-year bonds, which sold slightly below par value, giving an effective yield of just 0.07%.
In company news, shares in Ford (NYS: F) could see strong trading after the company's credit rating was restored to investment grade.
Meanwhile, the stock of Dell Computer is likely to fall sharply when the markets open, following a disappointing forecast for second-quarter revenues after the markets closed last night. Hewlett-Packard (NYS: HPQ) is also expected to report disappointing quarterly results after the bell today, with analysts expecting a 26% fall in earnings and a 5% drop in sales.
Other earnings announcements due today include the latest quarterly figures from Pandora Media, while luxury home builder Toll Brothers reported a profitable quarter before the markets opened, with net income per share of $0.10, overshooting analysts' consensus expectations of $0.03 per share.
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