Stock index futures pointed to a lower open on Tuesday as ongoing concerns over the strength of an economic recovery looked set to eclipse a report expected to show U.S. manufacturing expanded in August.
Some investors say the global rally in stocks, which has pushed the S&P 500 index up about 50 percent since early March, has run too far ahead of the recovery and may be due for a pullback. Recent falls in China's stock market have added to worries.
The Institute for Supply Management's survey follows similar reports in China and Europe that showed manufacturing around the world continues to stabilize. Stocks rose in Asia overnight but headed lower by as much as 1 percent in Europe. <.FTEU3>
As investors look for signs the nascent housing recovery is gathering steam, data is also expected to show U.S. pending home sales probably rose 2.0 percent in July, a slowing from June's 3.6 percent.
There are concerns mounting that the market has got ahead of itself, and as investors look to China it appears that they are running into a bout of concern regarding their own economy, said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.
Looking ahead to the data releases, he said: The market has to be certain there is no economic weakness, especially with the concerns in China - that would totally pull the rug from under the market.
S&P 500 futures fell 5.0 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 52 points and Nasdaq 100 futures dropped 6.25 points.
The ISM's manufacturing index, due at 10 a.m. along with the housing data, will likely show a reading of 50.5, up from 48.9 in July, according to forecasts of the 78 economists polled by Reuters. That would be the first positive reading since just after the recession began. A reading below 50 points to contraction while a reading above 50 points to expansion.
Following a familiar pattern, financials and commodity-related stocks sold off before the market opened. Freeport-McMoRan Copper & Gold Inc
Bank of America Corp
Shares of on-line auction and services company eBay Inc
(Reporting by Edward Krudy; Editing by Padraic Cassidy)