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NEW YORK (CNNMoney) — U.S. stocks were set to pull back Tuesday, after three straight sessions of healthy gains, as nearly stagnant economic growth in Europe stoked fears of a regional and global slowdown.
Dow Jones industrial average (), SP 500 ( ) and Nasdaq ( ) futures were down more than 1% ahead of the opening bell. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.
Lackluster economic growth in Germany, Europe’s largest economy, weighed on the broader region’s economy. Gross domestic product for the eurozone, which is made up of the 17 nations that use the euro, grew by a tepid 0.2% from the prior quarter — and by 1.7% on an annual basis.
The quarterly pace of economic growth was the slowest since the end of the recession.
The decline in output intensifies concerns about the future viability of the 12-year old currency union.
The long-running debt crises in Greece, Portugal and Ireland accelerated in the second quarter, and investors are also worried that Europe’s larger economies, including Spain and Italy, may need to be bailed out.
“The data confirm that the region’s core economies are in no position to support the periphery, adding to the already significant risk of an eventual eurozone break-up,” said Jennifer McKeown, senior European economist at Capital Economics, in a note to clients.
European economy hits a wall
The weakness comes ahead of a key meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy, scheduled for later Tuesday.
The leaders are expected to discuss measures announced last month to contain the sovereign debt crisis and protect the euro.
On Monday, U.S. stocks moved solidly higher with major indexes rising about 2%, as merger activity — particularly Google’s (Fortune 500) bid for Motorola Mobility ( ) — set a positive tone on Wall Street.,
Economy: The government reported import prices for July rose 0.2%, excluding oil, after a 0.1% decline in the prior month. Excluding agriculture, exports increased by 0.2%. The data followed a 0.1% increase in June.
Housing starts fell 1.5% in July to an annual rate of 604,000, while permits to build new homes slumped 3.2%. Both reports came in worse than expected.
Companies: Second-quarter results continue to roll in Tuesday.
Shares of Home Depot (Fortune 500) rose 2.2% in premarket trading after the home improvement retailer beat earnings and sales expectations and lifted its outlook for the year.,
Wal-Mart (Fortune 500), the world’s largest retailer, raised its full-year profit forecast as second-quarter earnings topped estimates by a penny, and sales rose 5.5% to $108.6 billion. The stock jumped 2.2%.,
Dell (Fortune 500), which reports after the bell, is estimated to post a profit of 49 cents a share, according to analysts surveyed by Thomson Reuters.,
World markets: European stocks were in the red during morning trading. Britain’s FTSE () 100 dropped 1.3%, the DAX ( ) in Germany sank 2.6% and France’s CAC ( ) 40 fell 2%.
Asian markets ended the session mixed. The Shanghai Composite dropped 0.7% and the Hang Seng in Hong Kong fell 0.2%, while Japan’s Nikkei added 0.2%.
Currencies and commodities: The dollar was higher against the euro and the British pound, but lost ground versus the Japanese yen.
Oil for September delivery slipped $1.48 to $86.40 a barrel.
Gold futures for December delivery rose $25.90 to $1,783.90 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.27% from 2.28% late Monday.
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