Stock Futures Plunge on 'Fiscal Cliff' Confusion
NEW YORK ( TheStreet) -- Stock futures were tanking Friday after House Speaker John Boehner, in a surprise move, cancelled Thursday evening's vote on his "Plan B" fiscal-cliff proposal because he wouldn't have had enough votes to pass it.
Stock futures promptly dropped following word of the cancellation as investors were thrown into state of great worry about the ability of officials in Washington to strike a budget deal as the "fiscal cliff" deadline line looms on Jan. 1.
Futures for the Dow Jones Industrial Average were plunging by 163 points, or 137.72 points below fair value, at 13,104. Futures for the S&P 500 were down by 18 points, or 14.89 points below fair value, at 1422. Futures for the Nasdaq were slumping by 35.25 points, or 33.30 points below fair value, at 2654.
"Simply put, this is bad news for the speaker and bad news for any future cliff-averting deal," said Dan Greenhaus, chief global strategist at BTIG.
Gareth Berry, a foreign-exchange strategist at UBS, said he thinks the headlines have been looking worse than they actually are. "After all, the plan was doomed to begin with given Democrats had already decided not to put it to a vote in the Senate, and U.S. President Obama had already threatened to veto it if necessary."
Berry also noted that "the nervous market reaction was justified to some degree however, given it illustrates just how difficult it will be to reach a compromise solution before year-end."
The Republican's "Plan B" counteroffer had included some spending cuts with tax increases only for those making more than $1 million.
At 8:30 a.m. EST on Friday, the Bureau of Economic Analysis is expected by economists to report personal income growth of 0.3% in November after being flat in October. Personal spending is expected to have risen 0.3% after falling 0.2% in October.
The Census Bureau is forecast to say that durable goods orders rose 0.2% in November after being flat in October, and that excluding the transportation component durable goods orders fell 0.2% after rising 1.5% in October.
At 9:55 a.m., the final University of Michigan consumer-sentiment index is predicted to edge up to 74.7 from the prior print of 74.5.
The FTSE 100 in London was slipping by 0.82% and the DAX in Germany was off by 0.68%. Hong Kong's Hang Seng index finished down by 0.68% and Japan's Nikkei average shed 0.99% Friday.
Gold for February delivery was up $1.50 at $1,647.40 an ounce at the Comex division of the New York Mercantile Exchange, while February crude oil contracts were off by $1.09 at $89.04 a barrel.
The benchmark 10-year Treasury was up 10/32, diluting the yield to 1.766%. The dollar was up 0.14%, according to the U.S. dollar index.