By Inyoung Hwang and Sofia Horta e Costa
NEW YORK - U.S. stock-index futures declined as growth slowed in China’s services industry and American lawmakers signaled federal spending cuts will continue for weeks before they can reach a budget resolution.
Las Vegas Sands Corp. dropped 1.4 percent after saying it probably violated the U.S. Foreign Corrupt Practices Act. Celgene Corp. lost 1.5 percent after it presented test results for its experimental psoriasis medicine. Transocean Ltd. climbed 3.2 after reinstating its dividend payment. Hess Corp. rallied 3.7 percent after saying it will exit energy trading, marketing and retail businesses to focus on exploration and production.
Standard & Poor’s 500 Index futures expiring this month slipped 0.1 percent to 1,514.8 at 8:40 a.m. in New York, paring an earlier decline of as much as 0.6 percent. Contracts on the Dow Jones Industrial Average slid 22 points, or 0.2 percent, to 14,052. The S&P 500 rebounded last week from its only weekly loss so far this year, while the Dow rose to within 0.5 percent of its October 2007 all-time high.
“The macro economic picture has improved a little, but there is no reason to get excited,” Ivo Weinoehrl, who helps manage about $364 billion as U.S. equity portfolio manager at DWS Investments, said in a phone interview from Frankfurt. “The sequestration will cut roughly half a percentage point of growth this year. So the implication for the equity market is that it’s fully valued. Markets have rallied a lot.”
China’s services industries expanded last month at the slowest pace since September. The non-manufacturing Purchasing Managers’ Index fell to 54.5 in February from 56.2 in January, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said. A reading above 50 indicates expansion.
Automatic cuts in U.S. federal spending, half of which are in defense programs, went into effect March 1 following a congressional impasse. The government will reduce spending by $1.2 trillion over the next nine years, including $85 billion in this fiscal year. The budget cuts will cause a 0.6 percentage- point reduction in economic growth this year, the Congressional Budget Office has estimated.
Even as President Barack Obama phoned Democratic and Republican legislators over the weekend, Obama’s aides and congressional leaders signaled the budget reductions would continue for weeks, possibly months.
Both sides indicated that revisiting the reductions would begin after they resolve a confrontation over legislation that’s needed to keep federal agencies running beyond March 27, placing a premium on avoiding a government shutdown.