MW: Global data weigh on futures; Spending, ISM loom
Sequester remains in market spotlight for Friday
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Losses were increasing for U.S. stock futures on Friday, after weak data pummeled Europe stocks, and as investors readied for a key manufacturing gauge and personal income and spending data and as the sequester loomed large.
Extending an earlier fall, futures for the Dow Jones Industrial Average DJH3 -0.48% fell 40 points to 13,998, while those for the Standard & Poor’s index SPH3 -0.58% fell 6.1 points to 1,507.20.
Futures for the Nasdaq 100 index NDH3 -0.47% fell 8.75 points to 2,729.25.
Peter Garnry, equity strategist at Saxo Bank, said investors may be taking advantage of some downbeat Purchasing Managers Index figures out of the U.K. and Italy to lock in some profits. Otherwise, all eyes will be on a heavy round of U.S. data.
“The market, including investors in Europe, will all have their eyes on the U.S. economic data coming out later today including income and spending figures for January, in addition to the important ISM Manufacturing figure,” said Garnry. “We expect good numbers from the U.S. and that could be the catalyst for a bounce-back later today.”
Those data will come at 10 a.m. U.S. Eastern time, just after the open of U.S. markets. Economists polled by MarketWatch expect the ISM index, a key indicator that strongly correlates with gross domestic product, slowed to 52.5% from 53.1% in January. Read: The Tell: What to watch on the U.S. economy on Friday
At 9:55 a.m. Eastern time, the final release of the University of Michigan/Thomson Reuters consumer-sentiment index is expected to show a February reading of 76.4 versus 73.8 in January, owing to higher stock prices and a firmer labor market. That index came in at 76.3 in a preliminary reading from last month.
Construction spending will also be released at 10 a.m. Eastern.
Ahead of that, consumer spending and personal income data are due at 8:30 a.m. Eastern. Economists expect personal income fell 2.6% in January, owing to lower bonus payments and dividends, which would reverse a gain of that amount in December. Consumer spending, meanwhile, is expected to have risen 0.2%, matching December’s gain.
Of course, also on Friday, automatic federal budget cuts of $85 billion, known as the sequester, are likely to kick in after a pair of Senate bills aimed at replacing those cuts failed Thursday.
Wall Street stocks appeared to shrug off the budget drama in Washington, but also made a last-minute retreat amid mixed data on growth and employment. Read: Sequester cuts near as Senate bill fails
The Dow industrials DJIA -0.15% fell 20.88 points, or 0.2%, to end at 14,054.49, which is 110 points from the Oct. 9, 2007 record close. The index did rise 1.4% on the month, while the Standard & Poor’s 500 index SPX -0.09% fell 1.31 points to 1,514.68, 50 points from its Oct. 9, 2007 record close. Read: U.S. stock stall in stretch toward record
The Tell: Which Dow stocks should you have bought the Oct. 2007 peak?
Europe jobless, U.K. PMI gloomy
The Stoxx Europe 600 index XX:SXXP -1.07% was unsuccessfully swimming against a tide of data out of Europe on Friday. That index fell nearly 1% after data showed euro-zone inflation falling to 1.8% in February from 2% in the prior month, and January unemployment rising to a record 11.9% from an upwardly revised 11.8%.
Analysts at Capital Economics said inflation in the region is now below 2% for the first time since November 2010. “We think the [European Central Bank] might discuss an interest-rate cut or other unconventional policies at next week’s meeting,” they said in a note.
In addition, a PMI survey for the U.K. showed a contraction in manufacturing activity, which hit the British pound hard. The euro EURUSD -0.3527% was also undermined.
Within other markets, stocks in Shanghai and Hong Kong pulled back amid lackluster China manufacturing data. Two separate sets of manufacturing data showed activity at Chinese factories flattened in February versus the prior month. Read: Shanghai, Hong Kong stocks sag; Tokyo rises
As Europe stocks began to turn south, crude-oil and gold prices also fell. April crude was down nearly $1 to $91.02 a barrel, while gold for April delivery was off $10.80 to $1,567.30 an ounce.
Movers
On the corporate front Friday, Groupon Inc. GRPN -24.28% shares again will be front and center for investors. The daily-deals website dismissed its chief executive after a disappointing earnings report knocked off nearly a quarter of the value of its shares.
Gap Inc. GPS +1.26% shares could rise in the premarket after the clothing retailer reported late on Thursday that fiscal-fourth-quarter profit jumped 61% on strong comparable-sales growth in North America and fatter profit margins.
Wall Street on Friday may also be looking carefully at OmniVision Technologies Inc. OVTI -0.96% . Shares of the producer of image sensors used in consumer electronics declined after hours on Thursday after the company gave a fiscal-fourth-quarter outlook below analyst expectations.
And Salesforce.com CRM +1.37% shares are in focus. The customer-management-software producer reported stronger-than-expected quarterly results and an improved full-year sales forecast.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.
