Mar 04, 2013, 07.46 PM | Source: Reuters
MARKETS-USA-STOCKS:Wall Street set to open flat as global growth worries weigh
NEW YORK (Reuters) - Wall Street was poised to start Monday's session little changed as worries about the prospects for global economic growth prompted investors to step back from equities that are within reach of record highs.
Plans to tighten curbs on the housing market in China prompted worries about slower growth in the world's second largest economy.
Announced by China's cabinet late on Friday, the government could increase required downpayments and loan rates for buyers of second homes in cities where prices are rising too quickly, in the latest move to contain housing costs.
"It raises the question of growth in China," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
Along with the possibility of another Italian election on the horizon and the automatic spending cuts that are starting to go into effect in the United States, it could give investors the opportunity to take money off the table, Cardillo said.
"All of these things are an excuse for the market to take a little bit of a breather and have a choppy session," said Cardillo.
Providing potential support for the market, Janet Yellen, the Federal Reserve's influential vice chairwoman, said the central bank's aggressive monetary stimulus is warranted given how far below its full potential the economy is operating.
Domestically, the $85 billion in across-the-board spending cuts officially started taking effect over the weekend. Stocks have so far shrugged off concerns about the so-called sequester, but signs the cuts are beginning to take a toll on the economy could jostle markets.
President Barack Obama raised again the issue of cutting entitlements such as Medicare and Social Security as a way out of damaging budget cuts, a White House official said on Sunday.
S&P 500 futures were recently down 1.8 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures were down 17 points, and Nasdaq 100 futures lost 6 points.
Stocks have climbed to multiyear highs in recent months, putting the S&P 500 and Dow within sight of their record high levels. The indexes are up more than 6 and 7 percent, respectively, for the year so far.
The Dow is less than 1 percent away from hitting its life-time closing high, while the S&P is 3 percent below its record close.
The latest flare-up in the euro zone sovereign debt crisis weighed on futures as Italy appeared to be inching toward another round of elections within months.
Center-left leader Pier Luigi Bersani issued an ultimatum to anti-establishment 5-Star Movement boss Beppe Grillo to support a new government or return to the polls.
Warren Buffett, speaking on CNBC, said stocks are cheaper than other investments now. On Friday, Buffett warned shareholders that Berkshire Hathaway
(Editing by Kenneth Barry)