U.S. Stock-Index Futures Retreat as Data Cast Doubt on Economic Recovery

U.S. stock futures fell, indicating the Standard & Poor’s 500 Index may extend last week’s slide, as weaker-than-forecast reports on New York manufacturing and Japan’s economy added to concern the global recovery is slowing.

American Express Co. and Google Inc. led declines in the largest U.S. stocks. Corinthian Colleges Inc. slumped 12 percent as Deutsche Bank AG downgraded the shares. Chesapeake Energy Corp., the second-largest U.S. natural gas producer, rose 1.4 percent after being raised to “outperform” at BMO Capital Markets.

S&P 500 futures expiring next month dropped 0.3 percent to 1,072.8 at 9:05 a.m. in New York. Dow Jones Industrial Average futures retreated 23 points, or 0.2 percent, to 10,243 and Nasdaq-100 Index futures fell 0.3 percent to 1,810.

“People are wary because of weak economic numbers,” said Peter Jankovskis, who helps manage about $2.2 billion as co- chief investment officer at Oakbrook Investments in Lisle, Illinois. “Japan’s figures got investors concerned. Over here, corporate earnings have been strong. However, we’ll have a fair amount of economic data this week and investors will be waiting to see what those numbers will show.”

‘More Modest’

About $1.9 trillion has been wiped from the value of global equities since the Federal Reserve said Aug. 10 that the pace of economic recovery will probably be “more modest” than forecast. The 4.3 percent retreat in the S&P 500 since Aug. 9 threatened the index’s rebound from a 10-month low on July 2, trimming its advance since then to 5.5 percent.

The Fed Bank of New York’s general economic index rose to 7.1 this month from 5.1 in July. Economists forecast the measure would rise to 8, according to the median estimate in a Bloomberg News survey. Readings greater than zero signal expansion in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.

Gross domestic product in Japan rose an annualized 0.4 percent in the second quarter, the country’s Cabinet Office said today, pushing the economy into third place behind the U.S. and China. The median estimate of 19 economists surveyed by Bloomberg News was for growth of 2.3 percent.

“The market is still nervous and optimism from the second- quarter earnings reports can quickly be diminished by other factors,” said Christian Falkner, an analyst at Alpha Wertpapierhandels AG in Frankfurt. “I don’t see one single event, but a combination of bad economic figures and the statements from the Federal Reserve and the Bank of England on economic growth last week.”

Corinthian Tumbles

Corinthian Colleges sank 11 percent to $5.92 after BMO Capital Markets downgraded the stock to “market perform” from “outperform.”

Chesapeake Energy gained 1.4 percent to $21.07, after being raised to “outperform” from “market perform” at BMO Capital Markets. The 12-month share-price estimate is $30.

3Par Inc. surged 85 percent to $17.89. Dell Inc. agreed to buy the maker of hardware and software for reducing information- storage requirements for about $1.15 billion. 3Par investors will get $18 a share in cash. That’s almost double the stock’s closing price of $9.65 on Aug. 13.

Investors are moving more money than ever before out of stocks and into bonds, widening a valuation gap and convincing the biggest money managers that now is the time to buy equities.

About $33 billion flowed out of funds owning U.S. shares this year even as the economic recovery sent free cash flow for American companies excluding banks to 6.8 percent of their market value. That’s the highest level compared with corporate debt yields since 1960, Credit Suisse Group AG data show. About $185 billion was sent to bond funds through July 31, the most on record, according to the Investment Company Institute.

“People would rather overpay for bonds than underpay for stocks,” said David Kelly, who helps oversee $445 billion as chief market strategist for JPMorgan Funds in New York. “It’s a reflection of an extraordinary prejudice. If people are at an emotional extreme, it means that at some point there’s got to be reallocation of cash away from the bond market toward the stock market. Ultimately, it’s bullish.”