Stock Futures Slump on Tepid Chinese, European Manufacturing Data
NEW YORK (TheStreet) -- Stock futures were edging lower Wednesday following tepid manufacturing reads from Europe and China.
Futures for the Dow Jones Industrial Average were off 7 points, or 4.7 points below fair value, at 12,938. Futures for the S&P 500 behind by 1.2 points, or 1.2 points below fair value, at 1359. Futures for the Nasdaq were falling 2.3 points, or 1.2 points below fair value, at 2589.
Stocks posted a mixed close Tuesday as the Dow pulled off the 13,000 mark and the market gave Greece's second, €130 billion bailout package a tepid reception.
Two reports from Markit Economics on manufacturing activity in Europe and China were weighing on futures. Eurozone business activity dipped to 49.7 in February from 50.4 in January according to Markit Economics' purchasing managers index. Analysts had expected an increase to 50.6. Any reading below 50 suggest economic contraction.Markit Economics' purchasing managers index on China manufacturing came in at 49.7 in February, rising marginally from 48.8 in January. "Growth remains on track of slowdown, despite the marginal improvement in the headline flash PMI led by quickened production after the Chinese New Year," said Hongbin Qu, chief economist at HSBC. "With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth." The first major U.S. report of the week will come out today at 10 am EST with the National Association of Realtors' reading on existing-home sales for January. Investors will be looking for further indications that the housing market has bottomed out. Sales are expected to have ticked up 2% to a 4.65 million-unit annual rate, according to estimates from Thomson Reuters. In December, existing-home sale rose 5% to a 4.61 million annual pace. While the consensus target remains considerably below the cyclical peak of the 6.84 million units that changed hands in 2006, it marks the fourth consecutive monthly gain in this indicator, representing an 11% advance since September, said Millan Mulraine, senior U.S. strategist, TD Securities. "There is every reason to be encouraged by the recent positive momentum in the housing sector, particularly given growing evidence of stabilization in activity in the past few months," said Mulraine, who noted that for the economy to successfully transition to a "self-sustaining" economic recovery powered by consumer spending it is necessary that the housing sector stabilizes and the labor market builds on the positive momentum of the past two months. "Admittedly, with the approval of the Greek bailout package -- reducing the threat of a disorderly default -- and the passage of the full-year extension of the payroll cut on Capitol Hill last week, two potential near-term downside risks to the economic recovery have been removed," he added. Although nerves about Greece have been somewhat alleviated with the second bailout plan for the country, investors are still impatient to hear that the country has completed a swap of private debt holdings by March 10, which is part of the deal. Germany's DAX was down 0.63% while London's FTSE was falling 0.36%. Japan's Nikkei Average settled up 0.96% and Hong Kong's Hang Seng finished up 0.33%.
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