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US stock market futures rise a day after Dow's worst drop this year
U.S. stock market futures rose Wednesday, a day after the Dow Jones industrial average took a 203-point dive, its worst drop this year.
Dow Jones industrial average futures were up 59 points to 12,803. Standard & Poor's 500 futures added seven points to 1,349, and Nasdaq composite futures added 14 points to 2,604.
It's too early to tell whether the decline Tuesday signals the end of a strong rally in stocks that began last Oct. 4, but investors might be glad to know that the rally has survived six other 200-point drops in the Dow.
On Nov. 21, the Dow fell 248 points after a congressional committee failed to reach a deal to reduce federal spending. Two days later, it fell 236 points because of worries about the European debt crisis.
But the Dow is still up almost 20 percent since its close on Oct. 3, 2011, and 4.4 percent this year ' even after Tuesday's sell-off, driven by concerns about Europe and slower economic growth in China.
"We had one pullback," said Frank Fantozzi, CEO of Planned Financial Services, a Cleveland wealth management firm. "I think it's not indicative of anything, that all the sudden we're going to jump off a cliff, or that the market is going to go in a different direction."
The Standard & Poor's 500 index, a broader measure of the market than the Dow, is ahead 6.8 percent for the year.
Wall Street's gains since October have been built on an improving economy in the U.S. Just last week, the Dow closed above 13,000 for the first time since May 2008.
Even before Tuesday, sentiment was growing that stock buyers might have gotten ahead of themselves. The thinking was that stock prices are already assuming a U.S. recovery, while the risk of a European recession and a default in Greece were downplayed.
So Tuesday was a step back. The Dow Jones industrial average gave up more than a quarter of its 745-point advance since Jan. 1, the best start to a year in the U.S. market since 1998.
The sell-off, which spread west from Europe, also interrupted a period of unusual calm on Wall Street. Before Tuesday, the Dow had not fallen 100 points for 45 straight trading sessions, the longest streak since 2006.
"When things go straight up and don't ever correct or have some sort of normal pullback, as an investor, that makes me nervous," said Ed Hyland, a global investment specialist with J.P. Morgan Private Bank.
Last year, sell-offs like this were much more common. The S&P fell by at least 1 percent on 48 trading days, roughly one in every five. During the depths of the financial crisis in the last four months of 2008, it happened roughly one in every three days.
European stocks posted a modest rebound Wednesday after dropping more than 3 percent Tuesday in Germany, Spain and France, and 1.9 percent in Britain.
The French CAC-40 was up 0.8 percent, while Germany's DAX rose 0.4 percent. The FTSE index of leading British stocks reversed earlier gains to decline 1.9 percent.
Cautious trading in Europe reflected continued concerns over Greece. Thursday marks the last day the country's private creditors can sign up to a deal meant to slash $139 billion off Athens' books and hopefully put it on the path to recovery.
The creditors will take hefty losses if they agree to swap their bonds, but European leaders have painted the deal as the only way to prevent a messy Greek default that would have widespread repercussions for banks and economies throughout the 17-country eurozone.
A default would rattle markets around the world at a time when concerns are mounting about slowing growth in China and other nations, and the still anemic U.S. recovery and rising oil prices.
Asian markets were lower Wednesday as they weighed these fears.
Japan's Nikkei 225 index fell 0.6 percent, while Hong Kong's Hang Seng slid 0.9 percent. South Korea's Kospi lost 0.9 percent. Benchmark indexes in Australia, Taiwan, Singapore and Indonesia also fell. In mainland China, the benchmark Shanghai Composite Index lost 0.7 percent.
The price of oil rose back above $105 a barrel on the New York Mercantile Exchange as speculators bet that a slowly improving U.S. economy would eventually boost demand.
New York crude has risen from $96 last month amid fears of a disruption in global oil supplies driven by the potential for military conflict with Iran. President Barack Obama said diplomacy can still resolve the crisis over Iran's possible pursuit of nuclear weapons.
AP Business Writers Eileen AJ Connelly and Sandy Shore contributed to this story.