By Ellis Mnyandu
NEW YORK (Reuters) - Stock index futures slid on Wednesday as news pointing to more upheaval in the banking sector fueled fears of further credit losses.
Bank stocks were set to be the top drags after Germany's Deutsche Bank
Even more unnerving to investors was a forecast by Morgan Stanley analysts that HSBC
Also helping to underscore the persistent bank sector turmoil was a deal announced by Citigroup
"There's more bad news than good news this morning, especially in the financial sector," said Arthur Hogan, chief market analyst Jefferies & Co in Boston. "That's what's putting a major weight on the market."
S&P 500 futures shed 6.90 points, and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures declined 62 points, while Nasdaq 100 futures lost 8.25 points.
Bank stocks were the top drags on stock markets in Europe, where benchmark indexes were down 2 percent or more.
Analysts have said the Smith Barney sale was a precursor to the break-up of Citigroup and suggested the bank must be urgently seeking to replenish capital due to mounting losses.
The financial sector unease came a day before JPMorgan
According to Thomson Reuters data, expectations for JPMorgan have been fast eroding. A month ago it was expected to earn 27 cents per share in the fourth quarter. Two days ago that view was down to 5 cents. Before the bell, the view was a penny before special items.
On Tuesday, Federal Reserve Chairman Ben Bernanke said more steps were needed to stabilize banks, reviving the idea of authorities sopping up toxic assets from banks' books.
Wednesday's economic diary includes December retail sales data at 8.30 a.m. and a Fed snapshot of regional economic conditions, the Beige Book, at 2 p.m.
Any further downside would mark another headwind for the market's recovery push from its November bear market low. The benchmark S&P 500 index <.SPX> began 2009 up more than 20 percent from that low but it is now up about 16 percent.
Stocks ended mixed on Tuesday, with the Dow down for a fifth straight day as investors fretted over what is expected to be a gloomy earnings season. The S&P 500 and Nasdaq ended higher as rising oil prices lifted energy shares and biotechnology companies gained.
(Reporting by Ellis Mnyandu; Editing by James Dalgleish)
