LONDON (MarketWatch) -- U.S. stock futures dropped Monday, as traders fretted that a recent rally has been too sharp even as the economy is looking closer to recovery.
S&P 500 futures fell 9.6 points to 930.90 and Nasdaq 100 futures fell 16 points to 1,479.00. Futures on the Dow Jones Industrial Average fell 80 points.
The day ahead
Futures are forecasting a lower open Monday. Bank shares will be in focus as the deadline for federal regulators to approve capital-raising plans at nine of the country's largest banks expires. WSJ's Matt Phillips has your day ahead. (May 8)
U.S. stocks finished higher last week in a period that concluded with data showing fewer jobs were lost in May than at any point in eight months. The Dow Jones Industrial Average rose 3.1%, the S&P 500 rose 2.3% and the Nasdaq Composite rose 4.2% last week.
The last time the Dow Jones Industrial Average rose for 11 weeks out of 13 was in the May-to-September period in 2003, when it rose 13 out of 15 weeks.
The recent gains have some worried that a pullback could come.
"It is easy to become very positive given the scale of improvement in the macro dataflow as well as in some of the technical indicators, and especially after a near-40% gain in the U.S. market from early March," added David Shairp, a strategist at J.P. Morgan Asset Management, in a research note. "However, set against this is the fact that several markets are looking extended; relative strength indicators are elevated and sector breadth is at extremes, suggesting that markets look in need of a breather."
The sell-off in the bond market also has fueled concern about stock valuations. Yields on 10-year Treasury notes fell 4 basis points to 3.80%. Yields move in the opposite direction to prices.
The dollar extended Friday's strength against major rivals, notably the British pound and the euro, after the payrolls data. News that Standard & Poor's downgraded Ireland's credit rating also had a negative euro impact.
Oil futures fell 75 cents a barrel, and gold futures fell sharply, losing around $13 an ounce.
Citi /quotes/comstock/13*!c/quotes/nls/c (C 3.43, +0.01, +0.29%) slipped 2% and Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 12.06, +0.20, +1.69%) also fell on the deadline for federal bank regulators to approve capital-raising plans.
Palm /quotes/comstock/15*!palm/quotes/nls/palm (PALM 12.13, -0.03, -0.25%) and the mobile operator Sprint Nextel /quotes/comstock/13*!s/quotes/nls/s (S 4.99, +0.03, +0.61%) will be in the spotlight as the Pre went on sale over the weekend.
Citi analysts said Pre is off to a solid start with sell outs across the country as the broker estimated that between 35,000 and 60,000 units were sold. After initial pre-market gains, Palm shares dropped 4%.
Meanwhile, Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 143.95, +0.10, +0.07%) is holding its worldwide developers conference, with the company expected to announce a new iPhone model. The keynote speech is expected to be delivered at 1 p.m. Eastern, with attention being put as much as to what's said as to who's delivering it -- the company has previously said Steve Jobs will return as chief executive at the end of June. Apple slipped over 1%.
General Mills /quotes/comstock/13*!gis/quotes/nls/gis (GIS 54.30, +0.08, +0.15%) rose nearly 2% as it increased its view on fiscal 2009 earnings per share.
Barclays /quotes/comstock/13*!bcs/quotes/nls/bcs (BCS 18.50, +0.15, +0.82%) said it's in talks about selling its fund management unit Barclays Global Investors to BlackRock /quotes/comstock/13*!blk/quotes/nls/blk (BLK 168.95, -0.41, -0.24%) .
The weaker yen helped automotive and technology shares in Tokyo, with the Nikkei 225 closing 1% higher. But South Korea's Kospi Composite index ended 0.1% lower, and the Hang Seng Composite index in Hong Kong closed 2.3% lower.
Stocks were weaker in Europe, with the Stoxx 600 falling 1.3%.
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