Stock futures fall after Portugal's rating cut

[March 24, 2010]  NEW YORK (AP) -- Stock futures fell Wednesday on renewed concerns about European debt problems after a major ratings agency slashed its view on Portugal.

European markets are lower after Fitch Ratings said Portugal's recovery will be slower than other countries that use the euro, hurting Portugal's ability to repay its debt. Debt problems in Europe have been one of the few drags on stocks in recent months.

Mounting debt in Greece, Portugal and other euro-zone nations have investors worried the countries will struggle to rebound economically and upend a global recovery.

The dollar strengthened sharply against the euro and other major currencies. The dollar is at its highest level against the euro since May.

The fresh worries about European debt more than offset expected signs of growth in the U.S. economy. Investors are awaiting reports on housing sales and durable goods orders that are expected to show growth in the sectors.

Ahead of the opening bell, Dow Jones industrial average futures fell 42, or 0.4 percent, to 10,786. Standard & Poor's 500 index futures dropped 5.70, or 0.5 percent, to 1,163.90, while Nasdaq 100 index futures fell 8.75, or 0.5 percent, to 1,953.50.

The Dow rallied to its highest level since September 2008 on Tuesday after the National Association of Realtors said a drop in sales of existing homes last month wasn't as big as forecast. The housing market will be in focus again Wednesday when the Commerce Department reports on new home sales.

The housing report is expected to show that sales rose 3.6 percent to a seasonally adjusted annual rate of 320,000 last month, bouncing off a record low seen in January, according to economists polled by Thomson Reuters. The report is due out at 10 a.m. EDT.

A recovery in the sector has been slow and uneven. Reports showing improvement or stabilization in the housing market have regularly been met with buying on Wall Street, such as Tuesday's big gains. The Dow jumped nearly 103 points, or 1 percent, and has risen in 10 of the last 11 trading sessions.

Investors on Wednesday will also receive a report on orders to factories for big-ticket manufactured goods. Unlike the housing market, the manufacturing sector has shown steady improvement in recent months.

Economists predict durable goods orders -- items expected to last at least three years -- rose 0.7 percent in February. Excluding the volatile transportation category, orders likely rose 0.6 percent.

Orders jumped 2.6 percent in January thanks to a surge in aircraft orders. Excluding transportation, orders fell 1 percent that month.

The Commerce Department report is due out at 8:30 a.m. EDT.

Meanwhile, bond prices were trading in a narrow range. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.70 percent from 3.69 percent late Tuesday.

Gold and oil prices fell.

Overseas, Britain's FTSE 100 fell 0.6 percent, Germany's DAX index dropped 0.7 percent, and France's CAC-40 fell 0.7 percent. Japan's Nikkei stock average rose 0.4 percent.

[Associated Press; By STEPHEN BERNARD]

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