NEW YORK -
Stock index futures were lower on Friday, indicating a weak start to the month of March as investors looked ahead to U.S. government budget cuts that were widely expected to take effect at the end of the day.
Equities have been on a tear lately, rising for four straight months to approach five-year highs while the Dow climbed to within striking distance of an all-time high. Any declines have been shallow or short-lived, with investors jumping in to buy on any dip.
The gains have come on the back of strong corporate earnings and an accommodative Federal Reserve. In that environment, many investors have shrugged off the potential impact of the sequester, $85 billion in spending cuts across federal government agencies that economists expect will shave half a percentage point off U.S. economic growth.
The cuts will take effect just before midnight Friday unless there is a last-minute deal, which is considered unlikely.
The International Monetary Fund said that if the cuts take effect, it would have to reevaluate its growth forecasts for the U.S. and the global economy.
Cyclical companies like banks and material stocks, which are closely tied to the pace of economic growth, are likely to be among the hardest hit in the short term.
S&P 500 futures fell 5.5 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 slid 33 points and Nasdaq 100 futures lost 9 points.
For the week, the Dow is up 0.4 percent while both the S&P and Nasdaq are down less than 0.1 percent. Both the Dow and S&P climbed more than 1 percent in February, slimmer gains than in January as equities grappled with uncertainties in Europe and Federal Reserve policy.
In earnings news, Gap Inc
U.S. stocks ended flat on Thursday, giving up modest gains late in the session. The Dow Jones Transportation Average <.DJT>, seen as a bet on future growth, hit a record intraday high earlier in the session.
(Editing by Bernadette Baum)