By Sara Sjolin, MarketWatch

Dow average slumps more than 100 points premarket

Wall Street was set for a downbeat trading day on Tuesday, as nervousness returned to the markets after weak Chinese manufacturing and an interest-rate cut in Australia fueled concerns about the health of the global economy.

Futures for the Dow Jones Industrial Average dropped 115 points, or 0.7% to 17,684, while those for the S&P 500 index lost 14.55 points, or 0.7%, to 2,059.75. Futures for the Nasdaq 100 index fell 31.50 points, or 0.7%, to 4,337.50.

The losses come after all three benchmarks closed higher on Monday (http://www.marketwatch.com/story/wall-street-stocks-lined-up-for-moderate-gains-ahead-of-ism-data-2016-05-02), driven by data showing slow-but-steady economic growth in the U.S. The Nasdaq Composite rose 0.9%, snapping a seven-session losing streak.

Augustin Eden, research analyst at Accendo Markets, said Tuesday's negative action came as investors digested the latest news from China and Australia. In China, a private gauge of nationwide factory activity in China fell to 49.4 in April (http://www.marketwatch.com/story/chinas-caixin-manufacturing-pmi-slips-again-2016-05-02), indicating a faster pace of contraction and missing analyst forecasts.

"And there's been an Australia interest-rate cut (http://www.marketwatch.com/story/dollar-slides-further-vs-yen-aussie-dollar-slumps-after-rate-cut-2016-05-03) that's potentially signaling a little bit of panic over on that side of the world and that has weakened the Aussie dollar quite a lot," Eden said.

"If you look at gold, it's trading around $1,300 an ounce, which if it breaks above that, that's a pretty good sign there'll be some safe-haven seeking. So there's a bit of fear in the markets this morning," he added.

The Australian dollar slumped to 75.70 U.S. cents (http://www.marketwatch.com/story/reserve-bank-of-australia-cuts-cash-rate-to-175-2016-05-03-0485414), down from 76.68 cents late Monday in New York.

The dollar, however, fell against most other major currencies as the yen renewed its hard push against the greenback. The dollar bought Yen105.88 from Yen106.54 late Monday. to trade around a level not seen since 2014.

The euro also surged against the buck (http://www.marketwatch.com/story/euro-leaps-above-116-for-first-time-since-august-dollar-dives-against-yen-2016-05-03), buying $1.1579, up from $1.1535 on Monday, on more bets that U.S. interest rates won't go up this year.

Data and Fed speakers: There was little on the economic data front on Tuesday, with only monthly auto sales among major releases.

Cleveland Fed President Loretta Mester is due to be on a panel at an Atlanta Fed conference at 10:30 a.m. Eastern Time. Mester is a voting member of the policy-setting committee this year.

Atlanta Fed President Dennis Lockhart, who is a non-voter, will give a speech on the economic outlook and monetary policy in Jacksonville, Fla., at 7 p.m. Eastern.

Movers and shakers: Commodity companies were under pressure in premarket trade as crude oil prices erased earlier gains and traded below $45 a barrel again (http://www.marketwatch.com/story/crude-oil-slammed-13-as-supply-glut-fears-return-2016-05-03).

Shares of Exxon Mobil Corp.(XOM) fell 1% premarket, Chevron Corp.(CVX) lost 1% and SeaDrill Ltd.(SDRL.OS) dropped 5.9%.

Pfizer Inc.(PFE) rose 2.9% ahead of the bell after the drugmaker's first-quarter earnings beat forecasts (http://www.marketwatch.com/story/pfizers-stock-surges-after-results-beat-expectations-outlook-raised-2016-05-03).

Clorox Co.(CLX) added 1.6% after the household products company beat on profit and lifted its 2016 earnings outlook.

Archer Daniels Midland Co.(ADM) fell 2% after the agricultural services company reported first-quarter profit and sales that fell more than expected (http://www.marketwatch.com/story/archer-daniels-midlands-profit-sales-fall-more-than-expected-2016-05-03).

Molson Coors Brewing Co.(TAP) could be active after better-than-expected earnings.

Other markets: Chinese stocks ended firmly higher (http://www.marketwatch.com/story/china-stocks-rise-after-president-xi-jinpings-verbal-support-for-market-2016-05-03), as investors appeared to welcome President Xi's call late last Friday -- after markets had shut -- to maintain a "healthy development of the stock market." Chinese markets were closed for trade on Monday for a holiday.

Europe markets dropped across the board (http://www.marketwatch.com/story/european-stocks-slammed-as-euro-jumps-banks-sag-2016-05-03), with a strong euro and weak bank earnings zapping investor confidence.

Gold stood out as the only major metal moving higher, up 0.3% at $1,299.60 an ounce.

(END) Dow Jones Newswires

May 03, 2016 07:30 ET (11:30 GMT)

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