With U.S. stocks trading near record highs, the
selloff in Europe will probably raise red flags and entice
shorts who have been shut out of the market. Many market
participants have called for a pullback, with the steady S&P 500
yet to see a daily decline of 1 percent or more since April 10.
Espirito Santo Financial Group <ESF.LS>, the largest shareholder
in Portugal's Banco Espirito Santo <BES.LS>, suspended trading
in its shares and bonds, citing "material difficulties" at
parent company ESI. Shares of the bank fell 17.2 percent.
Italian industrial output dropped 1.2 percent month-on-month in
May, its steepest monthly fall since November 2012, casting
doubt over prospects for the country's economic recovery.
Portugal's main stock index fell 4.5 percent and Italy's FTSE
MIB fell 2.6 percent. An index of European bank shares was down
2.8 percent. U.S. banks will likely fall on concerns over
exposure to Europe.
S&P 500 e-mini futures were down 17 points and fair value - a
formula that evaluates pricing by taking into account interest
rates, dividends and time to expiration on the contract -
indicated a lower open. Dow Jones industrial average e-mini
futures fell 138 points and Nasdaq 100 e-mini futures lost 33
points.
The CBOE Volatility Index is expected to snap higher after a
period of little movement. The VIX last week hit its lowest
level since early 2007. The VelocityShares Daily 2x VIX Short
Term exchange-traded note rose 8.2 percent in active trading.
Traders will look out for U.S. jobless claims data, due at 8:30
a.m. EDT, while wholesale inventories and sales are due at 10:00
a.m.
Shares of Lumber Liquidators <LL.N> fell 21.5 percent in
premarket trading a day after the hardwood flooring retailer cut
its earnings outlook.
(Reporting by Rodrigo Campos; Editing by Bernadette Baum)
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