U.S. stock futures are lower in pre-market trading for Tuesday, May 3. The Dow Futures are down -111.00 points to 17,688.0. The S&P 500 Futures are down -14.25 points to 2,060.0. The Nasdaq Futures are down -32.75 points to 4,336.25. The Russell Futures are down -10.40 points to 1,127.1. The futures are implying lower valuations for the day and the lower values are primarily the result of a weak manufacturing report from China.
China’s Caixin PMI, a key indicator for manufacturing, reported an Index level of 49.4 for April which is down from March’s 49.7 and below consensus of 49.9. An Index reading below 50 will often change the economic outlook since it usually signifies a contraction.
U.S. market indexes closed broadly higher on Monday as indexes regained some of their losses from last week following overcorrection to the downside after the Bank of Japan’s interest rate report and lower earnings results. Weak economic data in the U.S. has also been a factor and when paired with the news from China could potentially signify a global slowdown. Last week the Bureau of Economic Analysis reported a first quarter GDP growth rate of 0.5 percent. Economic indicators reported on Monday also supported further slowing in U.S. economic activity.
Key economic indicators reported on Monday included the PMI Manufacturing Index, the ISM Manufacturing Index and construction spending. The PMI Manufacturing Index showed flat output in the manufacturing sector with an April Index reading below the consensus of 51.0 at 50.8. The ISM Manufacturing Index also showed weak output. The April level of 50.8 was below consensus of 51.5. Construction spending for March was also below expectations with a 0.3 percent increase versus an expectation of 0.5 percent.
Economic indicators in the U.S. and globally will continue to be key factors to watch this week as the market digests potentially weaker results which could also slow interest rate increases from the Federal Reserve in 2016. Reports on Tuesday only include U.S. motor vehicle sales. Fed speeches from Loretta Mester and Dennis Lockhart will be key market highlights for the day.
Large-cap market indexes are likely to retreat Tuesday after a positive open to the week and month on Monday. The Dow Jones Industrial Average closed on Monday at 17,891.16 for a gain of 117.52 points or 0.66 percent. The S&P 500 Index closed at 2,081.43 for a gain of 16.13 points or 0.78 percent. Market sectors leading the day’s gains included consumer discretionary, financial services and consumer staples. In the DJIA for the year, Caterpillar (CAT), Chevron (CVX) and Exxon (XOM) are the leading stocks.
In the Dow Jones Industrial Average, Disney (DIS) and Pfizer (PFE) report first quarter earnings on Monday. Disney is expected to report revenue of $13.21 billion and earnings per share of $1.39. Estimates are expecting 6 percent growth in revenue and 13 percent growth in EPS from the comparable quarter.
On Tuesday before the opening bell, Pfizer reported first quarter earnings results that beat both revenue and EPS estimates. Revenue for the first quarter was $13 billion, beating analysts’ estimates by $1 billion and gaining 19.7 percent from the comparable quarter. EPS was $0.67, beating analysts’ estimates by $0.12.
Pre-Market Movers and Technology
Top pre-market movers on Tuesday morning include Ecolab Inc. (ECL) trading up 5.87 percent to $120.98. Newmont Mining Corp. (NEM) is also up 1.86 percent to $34.98. In the technology sector Amazon (AMZN) has been continuing to post significant gains since its Thursday evening earnings report. The stock has gained 13.6 percent since Friday after the company reported earnings results that beat analysts’ expectations for revenue and earnings with strong sales reported in the firm’s Amazon Web Services business. AWS has been a key market competitor in cloud for the technology sector and has been rivaling Microsoft and IBM for market share.
Nasdaq futures are down in pre-market trading, however Amazon appears likely to continue gaining. On Monday, the Nasdaq Composite closed at 4,817.59 for a gain of 42.24 points or 0.88 percent and the Nasdaq 100 closed at 4,381.30 for a gain of 40.00 points or 0.92 percent.
Pre-Market Global Indexes
Across the globe, global markets also appear to be trending lower. The FTSE in Europe is down -53.02 points or -0.85 percent to 6,188.87. The DAX in Germany is down -1.77 percent for a loss of -179.33 points to 9,943.94. In France the CAC 40 is trading at 4,374.21 for a loss of -68.54 points or -1.54 percent. Despite the lower manufacturing data report, China’s Shanghai Composite is slightly higher at 2,993.20 for a gain of 54.87 points or 1.87 percent. The Nikkei in Japan is at a level of 16,147.38 for a loss of -518.67 points or -3.11 percent.