U.S. Stocks Jittery as Japan Slides Back Into Recession

U.S. stock futures are indicated lower as markets focus on Japan's latest recession. Over the weekend, Japan reported that GDP for the July-September period was -0.4% quarter-over-quarter and -1.6% annualized. All economists surveyed had expected an expansion, with the average of +2.25%.

Dow futures are down 33 points, while S&P 500 futures are off 5 points. The Nikkei crashed nearly 3% to 16,973.80 amid the news.

The data showed a rebound in private-sector demand was weaker-than-expected, rising only 0.4% quarter-over-quarter. Capex was down 0.2% quarter-over-quarter versus an expected increase. In addition, government spending rose just 0.3% quarter-over-quarter, also weaker than expected. Public investment rose 2.2% quarter-over-quarter.

The news will mean Prime Minster Abe will likely postpone further the consumption tax hike originally scheduled for October. It could also boost calls for a larger stimulus package.

Politically, the move could bring out critics of Abenomics ahead of the expected snap election Abe is likely to call. While the ruling coalition will likely retain the majority, losing seats could dampen Abe's political power.

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