Tuesday outlook: Stocks to head lower amid slower economic growth

Meanwhile, U.S. futures pointed to a lower open ahead of a series of key economic reports, including data on regional manufacturing activity in the Midwest, consumer confidence and home prices.

The Dow Jones industrial futures were down 41 points to 9,938, the Nasdaq futures fell 9.75 points to 1,759 wile the S&P 500 futures shed 3.4 points to 1,041.7.

There has been growing concern throughout the month that the economic recovery is slowing to the point where the country could fall back into recession and data out on Tuesday’s isn’t likely to change that perception.

The Chicago Purchasing Managers Index likely fell in August to 57 from 62.3 last month. The drop in the index would follow other regional manufacturing indexes that showed activity in the sector slowing in other parts of the country throughout the month.

American consumers also remain uncertain about the economy, which has kept consumer confidence readings low. The latest reading on confidence is expected to show little change in August, according to economists polled by Thomson Reuters. The consumer confidence index likely inched up to 50.5 from 50.4 last month.

Meanwhile, the S&P/Case-Shiller Home Price Index likely grew at a slower year-over-year rate in June than it did in May. Prices were likely hurt by the expiration of the government’s home buyer tax credit, which provided a huge lift to sales earlier this year. Sales have tumbled since the credit expired.

The week’s U.S. economic reports also include the monthly manufacturing and services surveys from the Institute of Supply Management on Wednesday and the government’s employment report for August on Friday.

They will likely go a long way toward determining whether the U.S. Federal Reserve enacts further stimulus measures. Last week, Fed chairman Ben Bernanke said another round of monetary easing may be in the offing if the U.S. economy continues to weaken.

“This is a heavy week for U.S. economic data so markets are likely to be even more nervous,” said Phil Gillett, a trader at Spreadex.

All eyes later in the session will be on the minutes to the last rate-setting meeting of the Fed and how split the rate-setting panel is about the prospect of further monetary easing.

The TSX will also feel pressure from the resource sector as oil and metal prices backed off.

The September crude contract on the New York Mercantile Exchange fell $1.04 to US$73.66 a barrel, extending a month-long slump on demand worries.

September copper on the Nymex was off five cents to US$3.37 a pound.

However gold prices headed up with the December bullion contract in New York ahead $1.50 to US$1,240.70 an ounce.

Asian markets also fell back as investors fretted about the pace of the global economic recovery.

The pessimism was most pronounced in Japan, where the Nikkei 225 stock index tumbled 3.6%. As well as worrying about the slowdown in the U.S., Japanese investors are clearly concerned that the continued rise in the value of the yen and falling prices will push the world’s third-largest economy back into recession.

Hong Kong’s Hang Seng index retreated 1% and Australia’s S&P/ASX 200 fell 1.1%.

London’s FTSE 100 index lost 0.98%, Frankfurt’s DAX gave back 0.91% while the Paris CAC 40 shed 1.28%.