U.S. Futures Fall SharplyReported by SmartMoney.com on Friday, 1 June 2012 (on June 1, 2012)
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By William L. Watts U.S. stock index futures fell sharply Friday ahead of May nonfarm payrolls and other employment data, with investors taking a cue from Europe after surveys indicated the euro-zone debt crisis is taking a deepening toll on the region's manufacturing sector. More than thre hours before the start of trading, futures on the Dow Jones Industrial Average fell 119 points to 12264. The S&P 500 Index futures dropped 15.6 points to 1293.60 while Nasdaq-100 futures lost 25.5 points to 2498.50. Changes in futures don't always accurately predict early market moves after the opening bell.U.S. stocks on Thursday closed the books on a brutal May that saw the Dow halt a seven-month win streak to post a monthly loss of 6.2%. "U.S. nonfarm payroll data seem to be the next market focus?but recent data releases add downside risks," wrote strategists at Barclays in London. Economist surveyed by MarketWatch project the U.S. economy added a net 170,000 jobs last month after a rise in payrolls of 115,000 in April. The unemployment rate is expected to hold steady at 8.1%. Strategists said disappointing weekly jobless-claims data and a lackluster private payrolls estimate by Automatic Data Processing increased investor jitters ahead of the May report, which is due for release at 8:30 a.m. EDT. Meanwhile, European shares posted sharp losses as a final euro-zone purchasing managers' index for the manufacturing sector showed activity shrank at an accelerating pace last month. The Stoxx Europe 600 Index dropped 1.2%. German two-year yields dipped into negative territory for a second consecutive day, underlining investor desire for perceived havens amid worries about the euro-zone debt crisis. The Barclays strategists said the European Union's slow response to the region's continuing debt woes poses a threat to global economic prospects. The two biggest threats stem from a potential Greek exit from the euro and the possibility of a bank run in Italy or Spain, they said. While a Greek exit is unlikely in the near future "we cannot rule out accidents in which such an event might unravel."Meanwhile, legal and institutional hurdles make it difficult for policy makers to move to prevent a bank run, the strategists said. "To us, this means things likely would have to get worse before these constraints are de-prioritized, and therefore we remain cautious about holding risk in spite of some attractive valuations."Payrolls aren't the only item on the economic menu Friday. April personal income and consumer spending figures are also set for release at 8:30 a.m. EDT. The Institute for Supply Management's closely-watched index is set for release at 10 a.m. EDT. Investors will also see data on April construction spending. On the corporate front, U.S. auto makers will announce U.S. sales figures for May on Friday morning. Walt Disney late Thursday said it named Alan Horn chairman of Walt Disney Studios. Mr. Horn was president and chief operating officer of Warner Brothers Entertainment, where he was responsible for movie franchises including the "Harry Potter" series. Nymex crude-oil futures fell $1.51 to trade at $85.02 a barrel. Gold futures lost $10.30 to trade at $1,552.30 an ounce. The dollar index, which measures the U.S. unit against a basket of major rivals, rose 0.3% to 83.317. The euro fell 0.3% versus the dollar to $1.2323, while the U.S. unit lost 0.4% to the Japanese yen to trade at �78.11. ...
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