European Markets are called to open lower this morning.
Asian stocks slumped, with the region’s benchmark index set for the biggest drop in eight days, while metals, oil and South Korea’s won declined amid signs the global recovery is faltering.
The MSCI Asia Pacific Index lost 1.8 percent at 3:02 p.m. in Tokyo. Standard & Poor’s 500 Index futures added 0.1 percent after the gauge sank yesterday the most since August. Futures on the Euro Stoxx 50 Index slid 1 percent. Nickel, tin and aluminum sank at least 1 percent in London and oil retreated 0.8 percent in New York. The won snapped a five-day gain against the dollar.The euro rose after German Chancellor Angela Merkel said the European Union remains committed to its shared currency.
Analysts cut their forecasts for U.S. payroll gains in May after a private report yesterday showed employers added 38,000 jobs, less than a quarter of the median growth forecast by economists. Data today may show U.S. factory orders fell the most since October, while a separate report showed companies increased spending at a slower pace in Japan, where Prime Minister Naoto Kan faces a no-confidence vote today. “If you knock out employment gains, you really take back this idea that we’ve entered a sustainable recovery,” James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, said in a Bloomberg Television interview.
“If we’re no longer in a sustainable recovery, then investors get much more anxious.”
Almost five shares declined for every one that gained on MSCI’s Asia Pacific Index, which was set for the steepest drop since May 23. Japan’s Nikkei 225 Stock Average slid 1.7 percent, Australia’s S&P/ASX 200 Index sank 2.3 percent and Hong Kong’s Hang Seng Index lost 1.6 percent. China’s Shanghai Composite Index slumped 2 percent, set for its lowest close since Jan. 25.
U.S. stocks tumbled, giving the Standard & Poor’s 500 Index its biggest decline since August, as manufacturing expanded at the slowest pace in more than a year and employers hired fewer workers than forecast.
All 10 groups in S&P 500 slumped more than 1 percent. The Dow Jones Transportation Average, considered a proxy for economic growth, dropped 3.4 percent. Caterpillar Inc. and Boeing Co. retreated at least 3.4 percent, pacing losses in industrial companies. Banks had the biggest decline in the S&P 500 within 24 industries, sinking 4.7 percent, amid concern lending will slow as the economy loses momentum.
The S&P 500 retreated 2.3 percent to 1,314.55 at 4 p.m. in New York. The Dow Jones Industrial Average slumped 279.65 points, or 2.2 percent, to 12,290.14. The Russell 2000 index of small companies declined 3.2 percent, the most in nine months.
“We’re in a soft spot,” said James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $340 billion. “There are, of course, reasons for a slowdown. The rise in energy prices, the disruptions from Japan’s earthquake and the slower pace in emerging markets. The market will be consolidating until we get more evidence that this weakness is temporary.”
The S&P 500 fell 1.4 percent in May, the biggest monthly drop since August, amid weaker-than-estimated economic data and concern about Europe’s debt crisis. Citigroup Inc.’s U.S.
Economic Surprise Index, which tracks the rate at which data is beating or missing economists’ forecasts in Bloomberg surveys, turned negative in May and has since fallen to the lowest level since January 2009.
Events this week
Thursday: The Labor Department will release the initial jobless claims report at 8:30 a.m., as well as first quarter productivity figures.
Weekly jobless claims are expected to fall to 413,000, while first-quarter productivity figures will remain unchanged at 1.6% growth.
Also out on Thursday is the Commerce Department’ April factory orders report, which is expected to fall 0.9%.
Friday: All eyes on Friday will be on the May jobs report, out at 8:30 a.m.
The Institute for Supply Management will put out its May services index at 10 a.m. Economists are looking for the ISM services index to edge up to 53.3 from April’ 52.8