Wall Street was poised to open lower on Wednesday after Portugal was downgraded one notch on budget concerns, amplifying jitters about the sovereign debt troubles of some European countries.
The cut by Fitch Ratings to AA- dragged down European shares and took the euro to new 10-month lows against the U.S. dollar. Concerns over high sovereign debt loads among some euro zone nations, including Greece, have plagued equity markets, drawing investors away from risky assets, including stocks.
The stronger dollar hit commodity prices, which could weigh on resource companies. The price of oil futures tumbled 1.7 percent to $80.56 a barrel.
Fitch warned that further underperformance this year and next could bring another downgrade but added that the government's long-term austerity plan was broadly credible.
I think this is just the beginning of a long process of downgrading a number of major governments until they put their debt in order, said Rick Meckler, president of investment firm LibertyView Capital Management in New York.
It's a negative because it sends the message that investments that were previously thought to be safe could have problems to them.
S&P 500 futures fell 3.9 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 dropped 32 points, and Nasdaq 100 futures shed 6.25 points.
On the economic front, new orders for long-lasting manufactured goods rose for the third straight month in February and inventories posted their biggest gain since December 2008, the government said. Even so, futures were little changed after the report.
February new home sales are expected at 10:00 a.m. EDT.
MF Global Holdings Ltd
Design software maker Adobe Systems Inc
General Mills Inc
Stocks rallied Tuesday, led by the technology, industrial and materials sectors, driving the Dow and the S&P 500 to 18-month highs. The Dow chalked up its 10th day of gains out of the past 11 sessions.
(Editing by Jeffrey Benkoe)