LONDON -- Stock index futures at 7 a.m. EST indicate that the Dow Jones Industrial Average may open 1.2% lower this morning, while the S&P 500 may open 1.3% down.

House Speaker John Boehner was forced to abandon his "Plan B" fiscal-cliff proposal last night after he failed to secure sufficient backing from Republican congressmen. This development is not critical, but it will be seen as a setback by markets, as it increases the likelihood that politicians will fail to agree upon a deal before automatic tax raises and spending cuts kick in on Jan. 1.

Investors are likely to be in risk-off mode today, but the market may gain slight support if personal income and consumer spending figures turn positive. November's personal income is due at 8:30 a.m. EST, and consensus forecasts suggest a rise of 0.4% after it was unchanged in October. Consumer spending figures are also due at 8:30 a.m. EST and are expected to show a 0.4% increase for November after falling 0.2% in October. The November durable-goods order report, also due at 8:30 a.m. EST, is expected to show that orders rose by 0.1% last month after gaining 0.5% in October.


Shares that could be active in trading this morning include Research in Motion , which was down 10% in premarket trading after revealing a fall in subscribers and quarterly earnings in an update on Thursday afternoon. Nike could make gains after reporting strong order volumes after the bell on Thursday, while Walgreen is expected to report quarterly earnings of $0.70 per share before the bell this morning.

European markets
In Europe, markets drifted lower as fiscal-cliff fears weakened sentiment. In the U.K., third-quarter GDP growth was revised down from 1% to 0.9%, while GfK consumer confidence surveys in the U.K. and Germany both reported bigger falls than expected.

As of 7:45 a.m. EST, the DAX is down 0.6%, the CAC 40 is down 0.35%, the FTSE MIB is down 0.8%, and the IBEX 35 is down 0.37%. In London, the FTSE 100 is down by 0.6%. Among the biggest fallers in London were Barclays, down 2.2%, and BAE Systems, which fell 2% despite confirming a 2.5 billion pound deal to supply 20 Typhoon and Hawk aircraft to the Omani air force. Investors are concerned that the company may be affected by U.S. defense spending cuts and has failed to secure a deal to supply 72 Typhoon aircraft to the Royal Saudi Air Force.

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The article Dow May Plunge After Republicans Abandon "Plan B" originally appeared on Fool.com.

Roland Head owns shares in BAE Systems but does not own shares in any of the other companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of Nike. Motley Fool newsletter services have recommended creating a diagonal call position in Nike. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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