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* Futures down: Dow 0.60%, S&P 0.57%, Nasdaq 0.68%
By Medha Singh
Oct 2 (Reuters) - Wall Street's main indexes were set to
open lower on Wednesday, after hitting a one-month low in the
previous session, as a shock contraction in manufacturing
activity confirmed the domestic economy was feeling the burn
from a prolonged U.S.-China trade war.
The U.S. factory activity index in September hit its lowest
level in more than a decade, ISM data showed on Tuesday, joining
other major economies that have posted a similar slowdown.
On the first day of the fourth quarter, the S&P 500 .SPX
and Dow .DJI indexes recorded their sharpest slide in more
than a month, wiping off their third-quarter gains.
That spooked investors, whose confidence in the domestic
economy has been one of the factors fueling the benchmark S&P
500's rally this year.
The index is now about 3% below its all-time high hit in
July, after coming within striking distance of it two weeks ago.
"What is hard to argue with is that the global manufacturing
sector is now very much in a recession," Deutsche Bank
strategist Jim Reid wrote in a note.
"This now makes an already important Fed meeting later this
month even more of a crucial risk event."
The Federal Reserve, which cut interest rates for the second
time this year in September, indicated that it would rely on
economic data to determine future rate cuts.
Bets that the central bank would reduce borrowing costs in
October have risen to 64.7% after the ISM data, from 39.6% on
Monday, according to CME Group's FedWatch tool. The Fed's next
policy meeting will be held at the end of the month.
Other crucial factors influencing investor sentiment this
month include high-level trade negotiations between the United
States and China next week and third-quarter corporate earnings
reports.
The ADP National Employment Report, due at 8:15 a.m. ET
(1215 GMT) is expected to show U.S. private payrolls grew by
140,000 jobs in September, fewer than the 195,000 added in
August.
The report is seen as a precursor to the Labor Department's
more comprehensive jobs report, due on Friday.
At 7:18 a.m. ET, Dow e-minis 1YMcv1 were down 159 points,
or 0.6%. S&P 500 e-minis EScv1 were down 16.75 points, or
0.57% and Nasdaq 100 e-minis NQcv1 were down 52.25 points, or
0.68%.
Activision Blizzard Inc ATVI.O dropped 2.6% in premarket
trading after Bernstein downgraded the videogame maker's shares
to "market perform".
Monster Beverage Corp MNST.O fell 2.4% after the energy
drink maker's stock was downgraded by Guggenheim to "neutral."
Stitch Fix Inc SFIX.O dropped 8.1% after the company
forecast current-quarter revenue below analysts' estimates.
Shares in homebuilder Lennar Corp LEN.N gained 2.3% after
the company reported better-than-expected profit as cheaper
mortgage rates led to higher demand for its homes.