Disappointing China Data Weighs on Futures

Stock futures pointed to a hesitant start for Wall Street on Monday, with more disappointing numbers out of China weighing on global sentiment, as U.S. investors braced for a data-heavy week that starts with a survey on the manufacturing sector.

Overseas markets didn't provide encouragement, after Japanese stocks fell into a technical correction and European stocks also failed to find traction.

Futures for the Dow Jones Industrial Average fell 23 points to 15607, while those for the S&P 500 index fell 3.4 points to 1773.50. Futures for the Nasdaq-100 index eased 7 points to 3507.

The Institute for Supply Management is due to report its January manufacturing index at 10 a.m. EST, and economists are looking for momentum to be sustained in the report. The index is expected at 56, compared with 56.5 in the last report. Construction spending for December is due at the same time.

A full week of data ends with nonfarm payrolls on Friday, and economists are concerned the extremely cold weather could have distorted hiring gains again.

Meanwhile, investors are looking for reasons to push the market higher, after January closed out with the worst monthly decline in over a year, prompted by disappointing earnings, fears of deflation in the euro zone and more pain for emerging markets. The S&P 500 index lost 0.4% last week and 3.6% in January.

"The S&P 500 is testing trend support drawn from the November 2012 low, and a break of this trend could see the 200-day moving average come into play at 1706 over the coming weeks," said Chris Weston, chief market strategist at IG. Strategists eyeball these S&P 500 levels

He noted that among 50% of companies that have reported, 79% have beaten the forecast for earnings per share, while 65% have beat on revenue. If the U.S. index was trading on a "reasonable discount" to the long-run average, these numbers would have been a positive catalyst, he said.

"Given the market trades on 7% premium to the five-year average, we've needed to see the big heavyweight names providing really solid guidance and putting real backbone into the rally," Mr. Weston said. "However, this isn't happening. Mix in a number of macro concerns, and you can see rationale behind the recent weakness."

A new week was already setting up for some tough going after China produced some weak purchasing managers indexes for manufacturing and services sectors over the weekend.

The earnings calendar is fairly quiet for Monday, meaning downward moves for overseas markets might draw more attention. The Nikkei Stock Average fell 2%, putting it in a technical correction as it closed at 14619.13, which is just 10% off from a Dec. 30 high of 16291.

European stocks also fell on the heels of China data. The dollar drifted lower, and oil was also weaker, while gold firmed up as stock futures eased.

On the corporate front, shares of Jos. A. Bank Clothiers Inc. (JOSB) could be in focus after The Wall Street Journal reported Sunday that the company is in talks to buy fellow apparel retailer Eddie Bauer, citing sources. Jos. A. Bank and Men's Wearhouse Inc. (MW) have been locked in a months-long battle to buy each other out.

Monthly auto sales could put shares of Ford Motor Co. (F), General Motors Co. (GM.XX) and Toyota Motor Corp. (TM) in focus as well.