MW: U.S. stock futures fall as overseas markets retreat
U.S. stock futures lurched lower on Monday as selling continued in overseas markets, with the World Bank offering a pessimistic outlook on the global economy.
S&P 500 futures fell 11.2 points to 676.60 and Nasdaq 100 futures dropped 11.75 points to 1,064.75. Dow industrial futures fell 114 points.
U.S. stocks were battered last week, with the S&P 500 falling 7% in its worst weekly decline since late November. The Dow Jones Industrial Average slumped 6%, while the yield on 10-year Treasury bonds fell 0.14 percentage points as a report said that 651,000 jobs outside of the farming sector were lost last month.
"The global economy continued to be on investors' minds and the data pointed to ongoing malaise. The U.S. February labor report was the focus and as New York Fed President (William) Dudley said, the data underscored 'the economy has considerable momentum to the downside,'" said analysts at Ried Thunberg Icap.
The World Bank on Sunday sounded a glum note on the economy, saying it's likely to shrink for the first time since World War II. Global industrial production by the middle of 2009 could be as much as 15% lower than 2008 levels, the World Bank added.
Increased spending by governments around the world is more important in the short term than dealing with the global imbalances thought to be at the root of the global financial crisis, top White House economic adviser Lawrence Summers said in an interview with the Financial Times published Monday.
In Asia, the Nikkei 225 dropped 1.2% to a 26-year low and the Shanghai Composite skidded 3.6% lower. In Europe, banks paced a retreat, with the FTSE 100 falling 1.1%.
Still, UBS upped its asset allocation weighting on commodities to a small overweight from underweight. The analysts cited recent economic indicators from China as well as signs of inventories reducing. The analysts cut back their weighting on U.S. and European corporate bonds.
Oil futures edged up 22 cents to $45.74 a barrel. Gold futures fell nearly $6 an ounce, and the dollar was up against most rivals, notably the British pound which fell below $1.40.
Yields on 10-year British bonds, known as gilts, fell to a record low below 3%.
Of companies in the spotlight, Sterlite Industries reached a pact to buy Asarco for $1.7 billion of cash and notes, less than the $2.6 billion it agreed to pay last June.
Lloyds Banking Group dropped 8% in London after reaching a pact to have the U.K. government insure up to 260 billion pounds of assets in return for increasing its stake up to 77% from a current 43%.
American International Group successfully appealed for its fourth U.S. rescue by telling regulators its collapse would cripple money-market funds, force Europe banks to raise capital and cause competing insurers to fail, Bloomberg News reported, citing a 21-page draft AIG presentation dated Feb. 26. That presentation was circulated to federal and state regulators, the report said.
After the close, Texas Instruments is due to report its mid-quarter update. Other companies reporting results on Monday include J. Crew Group
