LONDON -- Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average (^DJI 0.40%) may open down by 0.6% this morning, while the S&P 500 (^GSPC 1.02%) may open 0.77% lower. Both markets closed down by more than 1% last night following yesterday's announcement by Federal Reserve Chairman Ben Bernanke that the central bank's asset-purchase program could start to be phased out later this year.
European markets slid sharply lower this morning as investors reacted to last night's news and started to reduce their exposure to risk assets. Sentiment was also depressed after new data showed that Chinese manufacturing activity is continuing to slow. At 7:10 a.m. EDT, the FTSE 100 was down 2.3%, while the DAX and the CAC 40 were down 2.4%. In London, the biggest fallers were gold miners Randgold Resources and Polymetal International, which were down by 5.9% and 6.6%, respectively, as the price of gold hovered around $1,300 per ounce.
Despite U.S. investors' likely focus on the consequences of the end of the Fed's asset purchase program, today's economic reports could also be significant. At 8:30 a.m. EDT, the latest weekly jobless-claims figures are due, with analysts expecting 340,000 new claims last week, up slightly from 334,000 the previous week. As unemployment is one of the key economic indicators being used by the Fed to justify its taper schedule, a surprise result here could affect the markets. Next up, at 9 a.m. EDT, June's Markit flash PMI is due, while at 10 a.m. EDT May's existing-home sales report is expected to show that 5 million new sales were agreed last month, up from 4.97 million in April.
Companies whose stock may be actively traded when markets open include Micron Technology, which reported a 5% rise in revenue and a return to profit after markets closed last night. Two other companies that reported after the close last night are Jabil Circuit, which fell by 3.8% in after-hours trading after reporting a 12% fall in third-quarter earnings per share, and Red Hat, which beat earnings expectations thanks to a 16% rise in third-quarter subscription revenue and rose by 3.4% in after-hours trading. Among the companies due to report earnings before the open today are Rite Aid and Kroger, while Oracle will update investors later today.
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