U.S. Stock Futures Drop as Spanish Bond Yield Surges

By Namitha Jagadeesh – Jun 18, 2012 1:31 PM GMT+0200


U.S. stock-index futures declined as Spanish borrowing costs surged, sparking speculation the country will be forced to ask for a bailout and outweighing optimism Greece will not leave the euro area.

Goldman Sachs Group Inc. (GS) declined 0.8 percent in German trading. Facebook Inc. (FB) retreated 1 percent in early New York trading.

Standard & Poor’s 500 Index futures expiring in September dropped 0.3 percent to 1,333.5 at 7:29 a.m. in New York, after rising as much as 0.7 percent and falling as much as 0.6 percent. The benchmark gauge advanced 1.3 percent last week on speculation central banks will act to boost the global economy. Dow Jones Industrial Average futures lost 36 points, or 0.3 percent, to 12,674 today.

“We all know there’s still a long and hard road ahead for Greece and the problems of Europe aren’t solved by this election,” said Belinda Allen, senior analyst at Colonial First State Global Asset Management in Sydney. “There are still concerns about Spain. Its debt metrics, its banking system needs a lot of work.”

Spanish 10-year bonds declined, pushing yields to as much as 7.139 percent, a euro-era record. The benchmark yield was trading at 7.135 percent at 1:26 p.m. in Madrid.

At this rate, Spain may lose market access and become the fourth euro member to need external funding, investors that oversee more than $3.2 trillion of assets said.

Greek Elections

In Greece, the New Democracy and Pasok parties won enough seats to form a majority in the 300-member parliament, an official projection showed, easing concern the country may exit the euro if voters rejected the austerity measures needed to qualify for international aid.

Goldman Sachs declined 0.8 percent to $94.88 in Germany, after climbing to a two-week high in New York on June 15.

Facebook Inc. lost 1 percent to $29.70 in early New York trading. The stock has lost 21 percent since it sold shares to the public on May 17.

LinkedIn Corp. (LNKD) fell 1.1 percent to $101 in early New York trading. The company said in a statement on June 13 it was “profoundly sorry” for the theft of about 6.5 million passwords that were posted on a hacker site.

Navistar International Corp. (NAV) jumped 4.7 percent to $31.36 in Germany. Hedge fund manager Mark Rachesky has revealed a 13.6 percent stake in Navistar’s shares, more than that of his former mentor, Carl Icahn, who owns 11.9 percent.

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