Gold prices bounce off 3-week lows; demand likely longer term
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* September U.S. private payrolls grow slower than expected
* E*Trade slides after Barclays double downgrades
* Activision Blizzard drops on Bernstein rating cut
* Better-than-expected profit boosts Lennar
* Futures down: Dow and S&P 0.46%, Nasdaq 0.54%
(Adds comment, details, updates prices)
By Medha Singh and Arjun Panchadar
Oct 2 (Reuters) - U.S. stocks were set to fall at the open
on Wednesday after the S&P 500 and Dow recorded their sharpest
drop in more than a month as domestic factory activity
contracted, pointing to impact from a prolonged U.S.-China trade
The U.S. manufacturing activity index in September hit its
lowest level in more than a decade, ISM data showed on Tuesday,
joining other major economies in posting a similar slowdown.
On the first day of the fourth quarter, the S&P 500 .SPX
and Dow .DJI indexes wiped off their third-quarter gains as
investor faith in the strength of the domestic economy, a key
reason for a rally in the benchmark index this year, took a hit.
The index is now about 3% below its all-time high hit in
July, after coming within striking distance of it two weeks ago.
"The weakening conditions in Europe and the slowdown in
China, it's all adding up to the same thing essentially: worries
that the global economy is slowing and giving investors reason
to pause and take profits," said Robert Pavlik, chief investment
strategist manager at SlateStone Wealth LLC in New York.
Blue-chip industrial companies Caterpillar Inc CA.NT and
3M Co MMM.N slipped more than 1% before the bell, leading the
decliners among Dow-listed companies.
Adding to worries, the AD National Employment Report showed
U.S. private employers hired fewer-than-expected workers in
September and payroll gains in the prior month were revised
down, pointing to a slowdown in the labor market. Investors will be looking at the Labor Department's more
comprehensive jobs report, due on Friday, for further
indications on the health of the domestic economy.
The Federal Reserve, which cut interest rates for the second
time this year in September, has indicated 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 70% after the ISM data, from 39.6% on
Monday, according to CME Group's Fed Watch 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.
At 8:50 a.m. ET, Dow e-minis 1YMcv1 were down 122 points,
or 0.46%. S&P 500 e-minis EScv1 were down 13.5 points, or
0.46% and Nasdaq 100 e-minis NQcv1 were down 41.75 points, or
0.54%.
E*Trade dropped 4.4%, extending losses from the
previous session, as Barclays double downgraded its shares after
Charles Schwab Schwa and TAD Ameritrade eliminated
commissions on online trading of stocks, ETFs, options.
Activision Blizzard Inc ATVI.O dropped 2.7% after
Bernstein downgraded the videogame maker's shares to "market
perform".
Monster Beverage Corp MNST.O fell 3% after the energy
drink maker's stock was downgraded by Guggenheim to "neutral."
A slide in crude prices dragged down shares of oil majors
Exxon Mobil Corp XOM.N and Chevron Corp CVX.N more than
0.6%.
Shares in homebuilder Lennar Corp LEN.N gained 2.8% after
the company reported better-than-expected profit as cheaper
mortgage rates led to higher demand for its homes.