Stock Futures Mixed on Housing Expectations, Bernanke Warnings
NEW YORK ( TheStreet) -- U.S. stock futures were pointing to a mixed open Wednesday as the markets weighed expectations of a robust read on real estate market conditions against warnings by Federal Reserve Chairman Ben Bernanke of continued European debt contagion risks.
Futures for the Dow Jones Industrial Average were ahead by 11 points, or 17.8 points above fair value, at 13,119. Futures for the S&P 500 were ticking up 0.7 points, or 0.7 points above fair value, at 1401, and futures for the Nasdaq were edging lower by 0.8 points, or 1.2 points above fair value, at 2735.
U.S. stocks edged lower on Tuesday following mixed housing market data and signs of a slowing Chinese economy, and after China began sharply raising retail gasoline and diesel prices.
On Wednesday, the National Association of Realtors is expected by economists to say that existing home sales likely rose last month to the highest in almost two years. The report will be released at 10 a.m. EDT. The consensus is that existing-home sales increased to an annual rate of 4.62 million in February from 4.57 million the preceding month.
Also providing market direction was Oracle, the database giant, which handily topped Wall Street's first-quarter earnings expectations. Oracle reported a non-GAAP profit of $3.13 billion, or 62 cents a share, for the three months ended Feb. 29 on revenue of $9.06 billion. Analysts were expecting earnings of 56 cents a share in the quarter on revenue of $9.02 billion.
Federal Reserve Chairman Ben Bernanke is scheduled Wednesday to speak about the European economic and financial situation before the Committee on Government Oversight and Reform of the U.S. House of Representatives. In a copy of the testimony posted on the central bank's Web site, Bernanke says that U.S. banks and money market funds remain vulnerable to any turn for the worse in Europe and risks of debt contagion remain a concern for these firms. Bernanke notes that although U.S. banks have limited exposure to peripheral European countries, their exposure to European banks and the larger, "core" countries of Europe are "more material."
Moreover, he said that European holdings represented 35% of the assets of prime U.S. money market funds in February, leaving these funds "structurally vulnerable" despite some constructive steps such as improved liquidity requirements, taken since the recent financial crisis.
"Were the situation in Europe to take a severe turn for the worse, the U.S. financial sector likely would have to contend not only with problems stemming from its direct European exposures, but also with an array of broader market movements, including declines in global equity prices, increased credit costs, and reduced availability of funding," he warned.
In other corporate news, General Mills (GIS) , the maker of Cheerios, reported a slip in earnings as increasing input costs and prices conscious consumers in the fiscal third quarter weighed on profitability. Profit came in at $391.5 million, or 58 cents a share, in the quarter ending Feb. 26, down from $392.1 million a year earlier. Revenue came in at $4.12 billion, compared to analyst estimates for $4.09 billion. Shares were slipping 0.2% to $38.76 a share.