(Reuters) – U.S. stock futures fell on Tuesday after weak manufacturing data raised fresh concerns about the strength of the U.S. economy, even as markets awaited a slew of reports this week to gauge the extent of slowing growth.
Stocks fell on Monday after survey data showed US factory activity slowed more than expected in May and construction spending fell in April, although the S&P 500 and Nasdaq indexes ended the session slightly higher.
“It was a day when American economic exceptionalism was called into question,” Chris Weston, head of research at Pepperstone, said in a note.
Megacap stocks including Nvidia, Apple, Alphabet and Meta fell between 0.3% and 0.9% in pre-market trading. The gains achieved by these interest rate-sensitive stocks had strengthened the Nasdaq index in the previous session, with US Treasury bond yields declining.
Broadly strong corporate earnings, coupled with seemingly resilient economic growth, kept Wall Street upbeat and supported stocks over several months, despite forcing markets to lower hopes regarding the timing and pace of interest rate cuts.
However, a series of recent data suggests the economy is slowing more than expected, causing investors to worry even as markets anticipate an early start to interest rate cuts.
Traders now expect about a 62% chance the Fed will cut interest rates in September, up from about 53% before the ISM data release and less than 50% last week, according to the Chicago Mercantile Exchange's FedWatch tool.
Several major reports scheduled for release this week are expected to provide a clearer picture of the health of the US economy, especially the labor market. The Job Opportunities and Labor Turnover survey is expected later on Tuesday, ahead of the closely watched non-farm payrolls numbers for May, due on Friday.
Factory orders data is also expected later in the day, and results of surveys on the services sector are due on Wednesday.
“The manufacturing report alerted us that the various employment data points this week and ISM services could all be real market-moving risk events, and the market will likely be sensitive to any downside surprises,” Weston said.
Monday's trading was also affected by a glitch on the New York Stock Exchange, which led to fluctuations in dozens of stocks. The New York Stock Exchange later said the issue had been resolved and that the exchanges had canceled erroneous trades in affected stocks, including Class A shares of Berkshire Hathaway.
At 5:51 a.m. EST, the Dow Jones e-mini was down 208 points, or 0.54%, the S&P 500 e-mini was down 31.5 points, or 0.59%, and the Nasdaq 100 e-mini was down 112 points, or 0.60. %.
Among individual companies, Intel rose 2.3% after the company launched next-generation Xeon server processors and priced its Gaudi 3 AI accelerator chips at a lower price than its competitors' products.
Software programming platform GitLab fell 3.5% after forecasting weaker-than-expected second-quarter revenue late Monday.
(Reporting by Lisa Mattakal in Bengaluru; Editing by Pooja Desai)
