* Personal income sees biggest drop in 20 years
* Banks, materials may see biggest hit on sequester
* Groupon rallies in premarket as chief executive leaves
* Futures down: Dow 58 pts, S&P 6.6 pts, Nasdaq 13 pts
By Ryan Vlastelica
NEW YORK, March 1 U.S. stock index futures
pointed to a lower open on Friday, indicating a weak start to
March, as lackluster U.S. and global data indicated an economic
recovery that continues to struggle.
Investors were also looking ahead to U.S. government budget
cuts that were widely expected to take effect at the end of the
day, barring an unlikely last-minute deal. The International
Monetary Fund has said that if the cuts take effect, it would
reevaluate growth forecasts for the U.S. and the global economy.
Adding to concerns about U.S. growth was data showing that
January personal income fell 3.6 percent, its biggest drop in 20
Overseas, China's factory growth cooled to multi-month lows
in February as domestic demand dipped, and euro zone
manufacturing activity appeared no closer to recovery last
month, as a dire performance in France offset a return to growth
"The weakness overseas really spooked things, and that's
what's directing the ball right now," said Bill Stone, chief
investment strategist at PNC Wealth Management in Philadelphia,
who helps oversee $115 billion in assets.
"There are also jitters, with the Dow at the doorstep of
all-time highs. Given the speed of the advance we've seen,
there's plenty of room for a pullback."
Equities have been on a tear lately, rising for four
straight months to approach five-year highs while the Dow is now
about 1 percent away from its all-time intraday high of
14,198.10. Any declines have been shallow or short-lived, with
investors jumping in to seek value on any dips.
The gains have come on the back of strong corporate earnings
and an accommodative Federal Reserve. In that environment, many
investors have shrugged off the potential impact of the
sequester, $85 billion in spending cuts across federal
government agencies that economists expect will shave half a
percentage point off U.S. economic growth.
Cyclical companies like banks and materials stocks, which
are closely tied to the pace of economic growth, are likely to
be among the hardest hit in the short term. Bank of America
fell 1.2 percent to $11.10 in premarket trading while
Chevron Corp slid 0.6 percent to $116.43.
S&P 500 futures fell 6.6 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 slid 58
points and Nasdaq 100 futures lost 13 points.
For the week, the Dow is up 0.4 percent while both the S&P
and Nasdaq are down less than 0.1 percent. Both the Dow and S&P
climbed more than 1 percent in February, slimmer gains than in
January as equities grappled with uncertainties in Europe and
Federal Reserve policy.
Other data on tap for Friday includes the final Thomson
Reuters/University of Michigan sentiment index, which is seen
holding steady at 76.3. The Institute for Supply Management's
February manufacturing index is expected to dip to 52.5 from
53.1 in the previous month.
Groupon Inc gained 2.6 percent to $4.65 in
premarket trading a day after the online coupon company fired
its chief executive officer in the wake of weak quarterly
Gap Inc rose 3.9 percent to $34.20 before the bell
after reporting fourth-quarter earnings that beat expectations
and boosting its dividend by 20 percent, while Salesforce.com
Inc posted sales that beat forecasts, sending shares up
4.6 percent to $177.
U.S. stocks ended flat on Thursday, giving up modest gains
late in the session. The Dow Jones Transportation Average
, seen as a bet on future growth, hit a record intraday
high earlier in the session.