Stock futures tumbled Tuesday after the euro fell to a new four-year low. Major U.S. indexes are set to resume their slide due to fresh concerns about the health of Europe’s economic recovery. Stocks fell late Friday ahead of the long holiday weekend after Fitch Ratings cut its view on Spain’s debt.
A slowdown in manufacturing in China also worried investors. U.S. traders will get a reading on the domestic manufacturing sector after the market opens.
The Dow Jones industrial average fell 122 points Friday. Dow futures are down another 120 points early Monday.
The euro fell as low as $1.2112 before easing off that low to $1.2155. Markets worldwide have been tracking the euro, the currency used by 16 countries in Europe. The euro has been seen as an indication for confidence in whether countries like Greece, Spain and Portugal will be able to cut spending to contain mounting debt without stalling a recovery.
Investors in recent weeks have used any signs of weakening around the world to sell stocks and move into safe-haven investments like the dollar and U.S. Treasurys.
Ahead of the opening bell, Dow futures fell 120, or 1.2 percent, to 10,006. Standard & Poor’s 500 index futures dropped 15.40, or 1.4 percent, to 1,073.10, while Nasdaq 100 index futures fell 15.00, or 0.8 percent, to 1,837.00.
Stocks were hammered last month because of the concerns about a global slowdown. The Dow had its worst May performance since 1940, falling nearly 8 percent. All 30 components of the index fell during the month and the index has dropped in nine of the past 12 trading sessions.
Asian markets fell after a new report showed China’s manufacturing sector slowed last month. China has had one of the world’s strongest economies in recent years, so any slowdown there could stoke fears that a global rebound is slowing.
In the U.S., investors are awaiting a reading on manufacturing as well. The Institute for Supply Management’s monthly manufacturing index likely fell to 59 last month from 60.4 in April, according to economists polled by Thomson Reuters.
While the index would indicate manufacturing slowed slightly last month, any reading above 50 still indicates expansion in the sector. Manufacturing has shown some of the steadiest growth in the U.S. as the country emerges from recession.
A separate report is expected to show that construction spending was flat in April after growing 0.2 percent in March. The housing sector was one of the hardest hit markets during the recession and it has struggled to recover. Analysts are worried that the housing market could weaken more after the expiration of a home buyer tax credit in April.
Both the construction spending and manufacturing reports are due out at 10 a.m. EDT.
In corporate news, shares of BP Plc tumbled in premarket trading after its latest attempt to stop the oil spill in the Gulf of Mexico failed. Shares in the U.S. dropped $6.08, or 14 percent, to $36.87 in premarket trading.
Insurer American International Group Inc. rejected a lower offer from Britain’s Prudential Plc for one of its Asian insurance units. Prudential proposed cutting the initial $35.5 billion offer by about $5 billion. AIG shares dropped 98 cents to $34.40.
Hewlett-Packard Co. said it will cut about 9,000 jobs and record $1 billion in charges in the next several years as it creates fully automated commercial data centers. The technology company expects the moves to save it as much as $700 million annually. Its shares fell 51 cents to $45.50 in premarket trading.
Companies have been shedding jobs and improving efficiencies in recent years because of the recession.
High unemployment remains a major obstacle for a strong, sustained domestic recovery. The Labor Department’s monthly jobs report is due out at the end of the week. Economists expect the unemployment rate dipped to 9.8 percent as employers added 503,000 jobs last month.
With stock futures falling Tuesday, bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.26 percent from 3.29 percent late Friday.
Overseas, Britain’s FTSE 100 dropped 2 percent, Germany’s DAX index fell 1.7 percent, and France’s CAC-40 tumbled 2.1 percent. Japan’s Nikkei stock average fell 0.6 percent.
Copyright © 2010 The Associated Press.
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