Dow to Fall as Spain Bailout Nears

LONDON -- The Dow Jones Industrial Average (INDEX: ^DJI  ) is expected to open down today, according to futures markets, as the buzz generated by China's interest-rate cut fades and the markets face up to the reality of the eurozone crisis and the news that Spain is expected to request a banking bailout on Saturday. This morning's trading in Europe has seen widespread falls in stock and oil prices, trends that are expected to be mirrored here.

In a lean day for company earnings and economic data, only the April trade deficit and wholesale inventory figures are of interest. The trade deficit is expected to have narrowed from $51.8 billion in March to $49.5 billion in April, while forecasts suggest that inventories may have risen slightly. Once more, the main economic news of the day comes from Europe, where there is a growing sense that decision time is approaching.

Yesterday, rating agency Fitch downgraded Spain's credit rating by three notches to "BBB," saying it believes the cost of recapitalizing Spain's banks will be 60 billion to 100 billion euros. This morning, Reuters reported that four EU officials have confirmed that EU finance ministers will hold a teleconference on Saturday to discuss a Spanish request for banking aid. The proposals are understood only to include Spain's banks, not its government debt. Reuters says that an announcement from the EU is expected on Saturday afternoon (European time).

In other European news, there is growing evidence that the eurozone crisis is affecting Germany. German imports fell by 4.8% in April on a seasonally adjusted basis, with exports falling by 1.7%. Also in April, France's budget deficit contracted slightly, but its trade deficit expanded, while in Italy, industrial output fell by 1.9%. In London trading this morning, the price of a barrel of Brent Crude oil fell to $98, triggering speculation that OPEC members could decide to scale back production at their next meeting on June 14.

In company news, FTSE 100 (INDEX: ^FTSE  ) mining giant BHP Billiton (NYSE: BHP  ) fell by more than 2.5% in London trading after Bank of America Merrill-Lynch cut its profit forecasts for the group on the back of falling oil prices. The FTSE 100 was down by 1% at 7 a.m. EDT, with the DAX and CAC 40 showing similar falls.

U.S. stocks that could rise in trading today include health insurers Centene (NYSE: CNC  ) and Molina Healthcare (NYSE: MOH  ) , which announced last night that they had regained contracts in Ohio from which they had previously been rejected. Moving downward could be Progress Software, which announced disappointing quarterly earnings after the bell last night.

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