US stock futures fall ahead of manufacturing data

[September 01, 2009]  NEW YORK (AP) -- U.S. stocks are pointing to a lower opening as investors await data on manufacturing and housing.

The decline in stock futures comes as European shares drop after a slight rebound in Asian markets. Investors are worried that after a six-month rally in stocks around the world, markets are looking a little overvalued considering the economy's ongoing challenges. In Europe, data showed the euro zone's unemployment rate hit a new 10-year high in July.

As September -- a historically a tough month for stocks -- gets under way, investors will be looking to reports on manufacturing activity, home sales and construction spending for further evidence of the economy's health. Sales reports from automakers will also be closely watched.

The Institute for Supply Management, a trade group of purchasing executives, is expected to report that U.S. manufacturing experienced growth in August for the first time in 18 months. Economists are expecting the index will read 50.5 in August, compared with 48.9 in July. A reading above 50 indicates growth.

Meanwhile, an index that tracks pending U.S. home sales is forecast to rise in July for the sixth straight month, providing more evidence that the housing market is recovering. And construction spending is expected to be flat in July after growing in June.

Many automakers are set to post strong sales results for August thanks to the government's Cash for Clunkers program.

But analysts warn that sales could show a steep drop in sales in September and following months.

Ahead of the market's open, Dow Jones industrial average futures fell 62, or 0.7 percent, to 9,424. Standard & Poor's 500 index futures fell 7.60, or 0.8 percent, to 1,012.10, while Nasdaq 100 index futures fell 13.50, or 0.8 percent, to 1,611.50.

Overseas, China's Shanghai Composite Index rose 0.6 percent after a 6.7 percent plunge the day before that set off a wave of selling around the globe, including in the U.S. where major stock indicators posted moderate losses. The Dow fell about 48 points, its biggest drop in two weeks.

The sell-off in Chinese stocks, which have been volatile this month, was driven by concerns over that country's economy. Investors are worried about what that means for other economies that are so intertwined with China's, including the U.S.

Despite the market's concerns, and subsequent periods of choppy trading, stocks managed to have a pretty decent August. The Standard & Poor's 500 index rose 3.4 percent for its sixth straight monthly gain. It is up 50.9 percent since early March, the best six-month advance since 1938.

In other trading Tuesday, Japan's Nikkei stock average rose 0.4 percent. Britain's FTSE 100 dropped 1.2 percent in late morning trading, while Germany's DAX index tumbled 1.5 percent and France's CAC-40 was down 0.9 percent.

Bond prices were little changed early Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, held steady at 3.40 percent.

The dollar was mixed against other major currencies, while gold prices fell.

Oil prices slid 7 cents to $69.89 a barrel in premarket trading on the New York Mercantile Exchange.

[Associated Press; By SARA LEPRO]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.