U.S. stock index futures fell on Wednesday after a sharp market rally in the previous session, as investors focused again on Europe's debt problems.
Shares of European banks dropped on concerns a tight credit market will make it expensive for them to raise capital and for euro-zone countries to refinance debt. <.EU>
Italy's biggest bank UniCredit
And in a sign of how wary European banks are of lending to each other, commercial lenders' overnight deposits at the European Central Bank hit a new record high of 453 billion euros, data showed.
A huge sovereign refinancing cycle is kicking off in the euro zone in the first quarter, with traders worried that debt-laden countries such as Italy and Spain may have to pay high prices to meet their needs.
The market is pressured by European banks today, but this could change once again once we get a good set of economic data, said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
The momentum is still to the upside, and economic data will be the main theme as we get through the first month of the year.
Data on November factory and durable goods orders are due at 10 a.m. EST, with economists in a Reuters survey expecting factory orders to rise 1.7 percent, compared with a 0.4 percent drop in October.
S&P 500 futures fell 5.4 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 lost 37 points, and Nasdaq 100 futures added 0.25 point.
The U.S. Federal Reserve, in a move that could push back expectations of when near-zero U.S. interest rates will rise, will begin publishing its policymakers' forecasts for borrowing costs.
Republican presidential candidate Mitt Romney squeaked out a victory in Iowa's first-in-the-nation nominating contest on Tuesday as former senator Rick Santorum rode lingering conservative unease to a surprise second-place finish.
In company news, AT&T Inc
Eastman Kodak Co
U.S. investors pushed shares higher on Tuesday to begin the new year, with the broad S&P 500 index closing at its highest since late October.
(Reporting By Angela Moon; editing by Jeffrey Benkoe)