Stock Futures Drop on Global Contraction Concerns
NEW YORK ( TheStreet) -- U.S. stock futures were plunging Monday, dragged lower by data hinting at economic contraction in China and the eurozone.
News that French President Nicolas Sarkozy was lagging in the French presidential elections also rattled investors.
Futures for the Dow Jones Industrial Average were dropping 122 points, or 105.3 points below fair value, at 12,866. Futures for the S&P 500 were down 13.3 points, or 12.4 points below fair value, at 1362. Futures for the Nasdaq were falling 20.8 points, or 18.3 points below fair value, at 2654.
On Friday, blue-chip stocks posted their first weekly gain in three weeks as a wave of strong earnings reports offset worries about Europe and the global economy.
HSBC Holdings said Monday, though, that the preliminary HSBC China Manufacturing Purchasing Managers Index measuring manufacturing activity throughout the world's second-largest economy increased to a two-month high of 49.1 in April compared with a final reading of 48.3 in March. Still, any reading below 50 indicates contraction.
In Europe, Markit's preliminary composite purchasing managers index gave a reading that fell to a five-month low in April. The index fell for the third month in a row to 47.4, down from 49.1 in March, to signal a faster rate of decline of private sector economic activity. Output has fallen seven times in the past eight months.
In France's first round of presidential elections held on Sunday, President Nicolas Sarkozy fell behind opposition Socialist Party candidate François Hollande. Analysts worry that if Sarkozy is voted out and Hollande becomes president it will disrupt the continuity that's been developed between German Chancellor Angela Merkel and Sarkozy, who've worked very closely together on European debt crisis issues.
Separately, the Dutch government looked close to collapse Monday amid expectations that Prime Minister Mark Rutte would step down following failed high-level talks on an austerity package.
There are no major U.S. economic data scheduled for Monday.
London's FTSE was down 1.6% and Germany's DAX was falling 2.7%. Elsewhere, Japan's Nikkei Average settled 0.2% lower and Hong Kong's Hang Seng index finished down 1.8%.
In corporate news, Nestle has agreed to acquire Pfizer's (PFE) infant nutrition business for $11.85 billion. Pfizer, the drugmaker, had put the unit up for sale in July. The company has been selling non-core operations as it focus on new drug development.
Wal-Mart Stores (WMT) is also in the news after the world's biggest retailer failed to notify law enforcement officials after its own investigators found evidence that millions of dollars in bribes had been paid in Mexico to build stores across the country, according to a report from The New York Times .
Printer and copier company Xerox(XRX) reported first-quarter net income of $269 million, down from $281 million a year ago on restructuring charges and weaker margins.