Wall St set to drop as data, China fuel caution
Stocks headed for a lower open on Wednesday as a larger-than-expected 2.5 percent drop in June new orders for long-lasting U.S. manufactured goods revived worries that the economic recovery might be weak.
Falling commodity prices also looked set to weigh on shares of natural resource companies, and investors fretted about the impact of an overnight sell-off in Chinese stocks.
Concerns that authorities might take measures to cool the 80-percent gain in Shanghai shares this year sent Chinese stocks down 5 percent <.SSEC> -- their biggest daily decline in eight months.
But the slide in durable goods orders, the largest drop since January, drove stock index futures to the morning's lows. Investors sought more evidence that the economic recovery is gaining traction in order to sustain the market's latest run-up.
Durable goods orders were weaker than expected, but if we take out transportation, the data was a bit better than expected, said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.
The fall in futures today is a reaction to being overbought so much and the Chinese market falling about 5 percent last night. China is looking for some type of a reversal.
S&P 500 futures shed 7.2 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 dipped 42 points, and Nasdaq 100 futures were off 7.50 points.
Concerns about China also weighed on global commodity prices, with U.S. front-month crude falling 2.9 percent or $1.95 to $65.28 a barrel. The Select Sector SPDR Energy exchange-traded fund declined 1.7 percent.
The benchmark S&P 500 is up 44.8 percent from the 12-year lows of early March.
(Additional reporting by Angela Moon; Editing by Padraic Cassidy)
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