NEW YORK (CNNMoney) — U.S. investors watched Europe’s continued troubles Monday, June 18th as an election in Greece was unable to provide a sustained lift for markets overseas.
U.S. markets appeared headed for choppy trading as futures for the Dow Jones industrial average, S&P 500 and Nasdaq were moving from slightly negative to slightly positive and back throughout the morning. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.
The win in Sunday’s Greek vote by the New Democracy party — which supports the European bailout — helped reassure investors. There were worries that a victory by austerity opponents would lead to a Greek debt default and a potential breaking up of the eurozone.
But the Greek vote did little to assure investors about mounting problems in Spain and the Spanish banking system. While the election lifted markets in Asia, a rally in European stocks proved short-lived, and rising bond yields in Spain and elsewhere across Europe reflected the growing concern.
World markets: In Asia, the major indexes held most of their early gains to finish higher. Japan’s Nikkei ended up 1.8%, the Hang Seng in Hong Kong rose 1%, and the Shanghai Composite gained 0.4%.
But while European markets opened with solid gains, they soon pulled back. London’s FTSE 100 and Paris CAC 40 both swung between slight gains and slight losses. The FTSE was up 0.5%, but the CAC was little changed. Only Frankfurt’s DAX remained in positive territory throughout the early trading day, rising 0.6%.
The Greece’s Athex composite index jumped 5% on the election results there, as did shares of the National Bank of Greece in premarket U.S. trading.
But Spain’s IBEX 35 index plunged 1.4%. It was led lower by leading bank stocks there, an indication of investors’ focus on Spanish problems.
Yields on bond debt across the continent rose, led by Spain’s 10-year yield touching a euro-era record high of 7.13%, up 0.25 percentage point, before pulling back to 6.93%. Any reading above 7% is seen as a warning sign that a nation will need a bailout by other countries in the eurozone. Yields on Italian 10-year bonds also moved above the 6% mark.
Shares of Banco Santander and BBVA, Spain’s two largest banks, were down more than 2% in both in U.S. premarket trading as well as in Madrid.
“The news out of Greece was comforting, but the rates going through the roof again in Spain and Italy are overshadowing the news out of Greece,” said Peter Cardillo, chief market economist at Rockwell Global Capital. He said he believed U.S. markets were likely to continue to focus on news out of Europe, at least until the meeting of the Federal Reserve concludes Wednesday.
While Spain has requested help with a €100 billion bank bailout of its banking sector, it has yet to request a bailout for its own sovereign debt. But the higher yields could raise borrowing costs so high that it could be forced to do so.
U.S. stocks rose Friday as investors maneuvered ahead of the Greek elections. The Dow Jones industrial average, Nasdaq and S&P 500 all ended higher, putting a bow on a weekly increase for all three indexes.
Economy: Greece will be front and center as world leaders meet in Mexico on Monday for the Group of 20 summit. Analysts are expecting a lot of talk but not a lot of action.
In the United States, the Supreme Court could hand down a ruling as early as Monday on the Affordable Care Act, the Obama administation’s health care reform legislation.
While the court is focused primarily on the law’s individual mandate provision, which requires most Americans to buy health insurance or face financial penalty, the justices could strike down the entire legislation.
Large insurers such as UnitedHealth Group, WellPoint and Aetna will be affected by a decision on the law.
Companies: Microsoft is expected to announce some news related to its own tablet computer Monday at an event in Los Angeles. Shares of Microsoft, which rose 2.3% in Friday trading, edged up 0.4% in premarket trading early Monday.
Shares of Facebook spiked 6% Friday, giving the company a second-straight day of gains — something that has happened only twice since its IPO on May 18. But shares were down 0.9% from those levels in premarket trading. An article in Monday’s Wall Street Journal said decisions by Facebook lead underwriter Morgan Stanley were responsible for many of the problems with the Facebook IPO.
Morgan Stanley wasn’t moving in premarket trading, but the nation’s largest banks, JPMorgan Chase, Citigroup and Bank of America, were all about 0.5% lower in premarket trading on the uncertainty in Europe.
Currencies and commodities: The dollar was little changed against the euro, and higher versus the British pound and Japanese yen.
Oil for July delivery fell 82 cents to $83.21 a barrel.
Gold futures for August delivery fell $6.60 to $1,621.50 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose slightly, pushing the yield down to 1.56% from at the 1.57% level reached late Friday.