MARKET SNAPSHOT: U.S. Stocks: Futures Fall As Europe's Economy Stumbles

By Barbara Kollmeyer, MarketWatch

German output sees surprising fall on Russia-Ukraine tensions

MADRID (MarketWatch) -- Stock futures fell Wednesday, tracking losses across Europe after data pointed to difficulties for two of the euro zone's biggest economies, and as investors waited for Russia-Ukraine developments that could help determine Wall Street's mood.

There is little U.S. data, but earnings news could continue to weigh on Groupon Inc., while a couple of failed mergers could draw attention to related shares.

Futures for the Dow Jones Industrial Average (DJU4) fell 31 points to 16,335, while those for the S&P 500 index (SPU4) eased 1.6 points to 1,911.40. Futures for the Nasdaq-100 index (NDU4) dropped 4.75 points to 3,867.

Trade deficit data for June will be released at 8:30 a.m. Eastern Time. Also on the economic front, Dallas Federal Reserve President Richard Fisher said after the close of Wall Street's session that the central bank may need to hike rates sooner than expected, if data continues to be as strong as the July Institute for Supply Management's service-sector index. The index reached the highest level since Dec. 2005 on Tuesday.

European tension

But it is Europe's economy that may provide extra tension for Wall Street on Wednesday. Stock futures pushed into the red after news that Italy unexpectedly fell back into recession in the second quarter, as its gross domestic product shrank 0.2%.

Already rattled by Russia-Ukraine fears, the Stoxx 600 index fell 1.3%, while stocks in Italy tumbled 2.2%. Other data showed German manufacturing orders dropping a surprising 3.2% in June on an adjusted basis, as geopolitical worries held back orders. The German DAX 30 index dropped 1.6%.

Investor sentiment was already dented by Tuesday's selling action on Wall Street, driven by reports that Russia has dramatically lifted the number of troops and vehicles on its border with Ukraine in the past few days. Polish Foreign Minister Radoslaw Sikorsk said in a television interview on Tuesday that there were more than a "dozen battalion-sized combat groups" on that border, Bloomberg reported.

In addition, Russian President Vladimir Putin also reportedly told his government to prepare retaliatory measures against sanctions by the U.S. and Europe. The DJIA closed down 0.8%, or 139.81 points, to 16,429.47, while the S&P 500 (SPX) dropped 1%, to 1,920.21, on Tuesday.

"With the Dow Jones brushing the 200-day moving average for the first time since the end of January, there will be a lot of nervous bulls out there," said Chris Beauchamp, market analyst at IG, in a note.

Jitters carried over into Asia, where the Nikkei 225 index slid 1%. In other markets, Gold prices (GCU4) remained firm, while oil (CLU4) held steady ahead of inventory reports due later, and the dollar traded choppy.

Groupon, Time Warner, Sprint among stocks to watch

Corporate news might provide some distraction. Shares of Groupon (GRPN) slid 15% in Tuesday's late trade after the daily-deals company posted disappointing results. Groupon may not be bargain stock it seems

Investors will be chewing over some failed merger news. 21st Century Fox Inc. (NWSA) said late Tuesday that it was yanking its proposal to buy Time Warner Inc. (TWX) after its approaches were rejected. 21st Century Fox also approved a $6 billion share buyback program, and shares rose 8% in late trading.

Time Warner will report results ahead of the bell on Wednesday, along with Viacom Inc. (VIA)

Sprint Inc. (S) also said it would end its pursuit of T-Mobile US Inc. (TMUS) and would replace Chief Executive Dan Hesse with billionaire entrepreneur Marcelo Claure, who is untested as a wireless operator, The Wall Street Journal reported.

First-Solar Inc. (FSLR) could add to a 5% drop in late trade after the solar-energy company posted an earnings fall.

Shares of Walt Disney Co. (DIS) could be active after the company reported a 22% rise in fiscal third-quarter earnings, thanks in part to the animated blockbuster "Frozen."

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