Tuesday September 1st


Futures point to a sharply lower opening

U.S. stock index futures pointed to a sharply lower open on Tuesday, with Dow futures falling more than 400 points, following some weaker-than-expected Chinese data. Two sets of key Chinese data disappointed traders on Tuesday. The official manufacturing purchasing managers' index (PMI) edged down to 49.7 in August from 50 in July, while the final Caixin/Markit manufacturing PMI came in at 47.3 in August, the lowest reading since March 2009. The numbers failed to calm ongoing jitters about the world's second-largest economy, which led to the worst month for more than 3 years in August on the S&P 500, the U.S. benchmark stock index. Two key U.S. data reports are due out on Tuesday, which should give further indications on the strength of the domestic economy. The August ISM manufacturing index at 10 a.m. ET. and U.S. auto sales, which are expected to show continued strength in the consumer. As of the market close on Monday, analysts polled by Thomson Reuters expected a read of 52.6 for ISM manufacturing, a tick lower than July's 52.7 print. Construction spending data will also be released at 10:00 a.m. and will also be in focus for traders ahead of Friday's highly anticipated official jobs report. Also in focus will be a speech on the economic outlook on the U.S. economy from Boston Fed President Eric Rosengren in New York at 1:10 p.m. ET. The major averages lost more than 6 percent each in August. The Dow Jones industrial average closed Monday within 0.1 percent of correction territory, off about 115 points, at 16,528. The S&P 500 ended down 0.84 percent at 1,972, a key level some analysts are watching for support. A rocky August could be an indication of further short-term declines ahead. In Europe, equities accelerated after the weak Chinese data, with all major bourses in the region down about 2 percent. Asian stocks also slumped on the first trading day of September, with Japan's Nikkei 225 index chalking up a near 4 percent loss, after surveys of China's mammoth manufacturing sector showed a further loss of momentum in the world's second-biggest economy. In commodity markets, oil prices resumed their fall on Tuesday, with investors taking profits after Brent and U.S. crude soared more than 8 percent in the previous session. Brent crude for October delivery dropped more than $1.50 to near $52.40 a barrel after climbing $4.10, or 8.2 percent, in the previous session. U.S. crude for October delivery dropped more than 3 percent to below $48 a barrel. Gold rose on Tuesday as the dollar and global equities dropped on fresh signs of economic weakness in China and uncertainty over the timing of the Federal Reserve's first interest rate increase in nearly a decade. Spot gold was up 0.4 percent at $1,139.21 an ounce, while U.S. gold for December delivery was up 0.6 percent at $1,139.40.