NEW YORK -U.S. investors joined traders overseas in worrying that a three-month surge in stocks might be overdone.
Stocks fell in Europe and Asia on Monday, sending U.S. stock futures sharply lower. Futures extended their slide after an index of manufacturing in New York indicated that demand weakened in June from May.
The drop comes as the Standard & Poor's index is up 39.9 percent since skidding to a 12-year low on March 9. The market's advance slowed last week as traders looked without much success for fresh signs the economy was strengthening.
The dollar rose against other most other major currencies following comments from Russia's finance minister. The stronger dollar pushed down oil prices. A run-up in oil has helped lift energy and materials stocks in recent weeks.
Dow Jones industrial average futures fell 100, or 1.1 percent, to 8,690. Standard & Poor's 500 index futures fell 10.20, or 1.1 percent, to 930.50, while Nasdaq 100 index futures fell 13.25, or 0.9 percent, to 1,472.25.
Overseas, Japan's Nikkei stock average fell 1 percent. In afternoon trading, Britain's FTSE 100 fell 1.7 percent, Germany's DAX index 2.2 percent, and France's CAC-40 1.7 percent.
The main index from New York Federal Reserve's Empire State Manufacturing Survey fell 5 points in June to a negative 9.4. New orders remained negative and near May's level. But indexes looking further ahead continued to rise, which indicates conditions should improve during the next six months. Capital spending and technology spending measures turned positive for the first time since October.
Jeff Layman, chief investment officer at BKD Wealth Advisors, said investors are asking where is the market going to go after seeing its advance stall.
"What we've had in the last week and a half or so is really just sort of a consolidation. Things have stabilized a bit," he said. Layman said the gain in the dollar makes it unsurprising that stocks would fall.
Russia's finance minister, Alexei Kudrin, said during a weekend meeting of G-8 finance ministers in Italy that the dollar's status as the world's main reserve currency wasn't likely to change soon. He has been one of those in the Russian administration raising concern about the dollar in recent months.
The dollar was higher against most other major currencies, while gold prices fell.
Light, sweet crude fell 62 cents to $71.42 per barrel in electronic trading on the New York Mercantile Exchange.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.75 percent from 3.80 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.17 percent from 0.16 percent Friday.
Investors are also getting more specifics on Washington's plans for the biggest overhaul of the financial system since the Great Depression. Among the proposals, the Federal Reserve would have authority over the largest financial institutions whose failure could jeopardize the entire financial system.
Treasury Secretary Timothy Geithner and President Barack Obama's chief economic adviser, Lawrence Summers, outlined the White House proposal in an article Monday in The Washington Post.
The proposed changes to the oversight of the financial system come as investors are still trying to determine when and how the economy will emerge from the recession that began in December 2007.
The weekend's G-8 meeting offered investors little to go on. Finance ministers said they saw signs economies were stabilizing but said it was too soon to remove the supports of fiscal and monetary stimulus.
Rochdale Securities analyst Richard Bove raised his price target on Bank of America Corp., citing growing investor confidence in the bank and a change in how they view bank stocks. He raised his target to $19 from $14.
Bove wrote in a weekend research note, however, that the bank is experiencing "horrific" loan losses because of the recession.
Investors are looking for any signs about the economy. Stocks have been rising in recent weeks, though not as quickly as in March. The Dow and the S&P 500 index are up 12 of the past 14 weeks, and the last four straight weeks. But traders are having a harder time wringing advances from the stock market as questions remain about the timing of recoveries in employment and the housing market.
The gains in oil and other commodities are raising hopes for those industries but also fanning concerns that inflation will choke off the economy's rebound.
At the same time, trading volume has been light, which indicates fewer traders are standing behind the market's gains. Volume does tend to slow in the summer as traders take vacations but thin volume could indicate there is less conviction behind the market's gains.
