Stock Futures Decline As German Data Disappoints
Stock index futures fell on Monday, indicating last week's decline would continue as investors questioned growth prospects for the global economy.
German business sentiment dropped for a fifth successive month in September to its lowest level since early 2010, showing even the strongest of Europe's economies is succumbing to an economic downturn despite the European Central Bank's recently announced bond-buying plan. European shares .FTEU3 lost 0.6 percent.
Equities have advanced sharply in recent months on expectations for central bank stimulus. On Sept 6 the ECB announced its bond buying plan and a week later, the Federal Reserve announced a third round of quantitative easing intended to bolster the economy and reduce U.S. unemployment.
With the S&P 500 up more than 7 percent so far this quarter, investors have sought new catalysts to push shares decisively in either direction. Moves have been slight lately while volume is light. The S&P fell 0.4 percent last week, though the session with the biggest move only had the benchmark index down 0.3 percent.
"We've had such a strong quarter that it's difficult for us to keep moving up, especially since we're so light on economic news to trade on," said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York. "We're maybe in a sideways market without a lot of action for a while."
S&P 500 futures fell 5.9 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 51 points and Nasdaq 100 futures sank 8.5 points.
Lennar Corp (LEN.N) climbed 4.7 percent to $39.26 in premarket trading on Monday after reporting steep rises in its third-quarter earnings and revenue, while orders rose 44 percent. The results follow a similarly strong report from KB Home (KBH.N) and together indicate that the housing market is gaining traction.
Energy stocks will be in focus as crude oil fell 1.3 percent, continuing a drop of more than 6 percent last week as investors question the demand outlook.
"Oil is trending down because of slowing growth, and I wouldn't expect that to change in the short term," Pursche said. "However, I don't think it's so cheap yet that we'll see a real impact on consumer spending."
Investors will also be looking at transport stocks a week after two large shipping companies - FedEx Corp. (FDX.N) and Norfolk Southern Corp. (NSC.N) - warned about the impact of the weakening world economy on their results. The transportation sector .DJT is viewed as a leading indicator for the market at large.
Apple Inc (AAPL.O) will look to extend a rally that took the most valuable U.S. company to an all-time high. The rally came as the tech giant launched the latest version of its iPhone worldwide, generating blockbuster sales.
U.S. stocks closed flat on Friday even as investors welcomed Spain's efforts to seek a bailout and were lifted by gains in Apple.