US stock futures point to a lower open Thursday following yesterday’s last hour sell-off. The focus continues to be on Europe, where now rising borrowing costs for France and Spain are becoming a major worry. Both held bond auctions, and Spain saw its yield rise to euro-era highs. France is considered a rock solid, core member of the Euro zone, and its troubles are of great concern. Many expect France to lose its AAA credit rating within the next week.
Futures were actually surging overnight before Spain’s lackluster debt auction put a damper on the proceedings. Also this morning futures have pared losses that followed that auction thanks to a speech from new Italian prime minister. Mario Monti outlined new austerity measures, which took the pressure off Italian bond yields.
Commodity prices are also taking a hit this morning after a recent run. Crude for December delivery dropped $2.20 right back into the $100 threshold while Gold fell $33. Investor are waiting for weekly jobless claims and October housing starts at 8:30 ET, but Europe seems to be in control of the action for now.
Today’s lower open takes the S&P below its recent wedge formation, and a hold below will constitute a trigger of the pattern. Traders have been watching closely to see in what direction the pattern would resolve, and it appears most likely that resolution will come to the downside. Today’s close will be very important. If we can rally off the open and go green on the day, it would put definitive resolution on hold.
Also note that “Occupy” protesters are gathering today for a “Day of Action”, where they have pledged to close down the New York Stock exchange and target the subway system. While New York City law enforcement is out in full force ready to contain any unrest, it is something to keep an eye on.
By Marc Sperling
Disclosures: Marc Sperling is long INTC, APA, PXD, OIH, FIO, SPRD, GOOG, FOSL, CIEN, INHX.