Stock Futures Fall on Italian Turmoil
NEW YORK ( TheStreet) -- Stock futures were wavering Monday amid jitters over the political upheaval in Italy and as investors awaited more news from Washington on the U.S. budget negotiations.
Friday's stronger-than-expected U.S. November nonfarm payrolls report helped temper some of the negative sentiment.
Futures for the Dow Jones Industrial Average were down 4 points, or 12.13 points below fair value, at 13,139. Futures for the S&P 500 were down 1.70 points, or 2.76 points below fair value, at 1414. Futures for the Nasdaq were behind by 5.25 points, or 8.14 points below fair value, at 2630.
On Monday, Italy's 10-year bond yield spiked by more than 0.2 percentage points to 4.79% after the technocrat Prime Minister Mario Monti said over the weekend he intends to resign once the country's 2013 budget passes into law, following the loss of support from former Prime Minister Silvio Berlusconi's PDL party. Monti's resignation sparked worries over the efforts to repair the country's debt crisis.
Berlusconi announced that he will run for office again.
Monti had stepped in to replace Berlusconi after the Italian 10-year bond yield jumped to a record 7.48% in November 2011.
"The Eurozone's political scene was thrown into uncertainty ... Monti's succession was always going to be a potential stumbling block for the eurozone's crisis resolution, and the credibility of Italy's reforms will undoubtedly face closer scrutiny in the coming months, and yields will react accordingly," said Geoffrey Yu, a currency strategist at UBS. "Ahead today, the data flow is limited but no doubt newswires will be active in gauging the eurozone's reaction, as well as news on the fiscal cliff."
On the U.S. fiscal cliff front, President Barack Obama is expected to pay a visit to a Daimler engine plant in Michigan Monday to make his case for raising taxes on the wealthiest Americans.
"If an agreement on the cliff is reached before year-end, there will likely have to be some real movement in the negotiations within the next week, with Republicans giving ground on tax rates and Democrats offering cuts in entitlements," said Deutsche Bank economists. "One plausible compromise we consider would raise growth by 2% relative to a full fiscal cliff scenario."
Major U.S. stock averages traded mixed Friday after a better-than-expected November jobs report was tempered by worries about the progress on the U.S. budget talks in Washington and dimmer consumer confidence.
The University of Michigan Consumer Sentiment Index on Friday showed a big drop for December, with a reading of 74.5, the weakest number since August and down from 82.7 the prior month.
No major U.S. economic releases were expected for Monday.
The FTSE 100 in London was down 0.34% and the DAX in Germany was down 0.69%. Japan's Nikkei average closed up 0.07% on Friday and Hong Kong's Hang Seng index finished up by 0.39%, helped by an a positive read on consumer prices in China over the weekend and the upbeat U.S. employment data from Friday.