China selloff leaves stocks reeling chart for more premarkets data. By staff

NEW YORK( -- U.S. stocks headed for an early selloff Friday, following a volatile trading session in Asian markets that ended with the Shanghai Composite down more than 5%.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were all sharply lower ahead of the opening bell. Futures measure current index values against perceived future performance.

Stocks sank Thursday, a day after Cisco Systems issued a sales forecast that disappointed many investors. The network equipment maker is seen as a bellwether for demand across the technology sector.

G-20 leaders finished up their meeting in Seoul, South Korea, without any comprehensive plan to combat global economic woes. But they did agree to address "persistently large imbalances" next year.

"We know there are imbalances and we know this tension is behind them," said Philip Isherwood, equities strategist at Evolution Securities."The imbalances ... are adding to the political tension."

Those tensions come as worries about the global economy rear their ugly head. Ongoing concerns about a Europeans sovereign debt crisis, potential tightening of China's monetary policy, and tepid U.S. growth continues to keep investors on edge.

"If people were more confident that there was a broader sustained growth story, then the imbalances would be less of an issue," Isherwood said.

Stocks are also being underpinned by the Federal Reserve's recent move to stimulate the economy, by purchasing $600 billion worth of U.S. Treasuries over the next several months. The strategy, called quantitative easing, is largely seen by investors as part of a broader effort by the Fed to boost asset prices.

World markets: Asian markets ended the session decidedly lower, as investors fear future interest rate hikes in China. The Shanghai Composite plunged 5.2%, the Hang Seng in Hong Kong dropped 1.9% and Japan's Nikkei ticked down 1.4%.

"China clearly signaled the potential for tightening by raising the [banking] reserve requirements earlier in the week," Isherwood said.

Interest rate hikes are expected due to rising inflation, Isherwood said. Led by food prices, the Chinese consumer price index has been on the rise in recent months.

"Where there is excess growth, there are fears of excess inflation," Isherwood said.

European stocks fell during morning trading as well on worries of the eurozone's fiscal crisis. Britain's FTSE 100 edged lower by 0.3%, the DAX in Germany slipped 0.1%, and France's CAC 40 declined 1.0%.

Economy: A report on consumer sentiment comes out just after the market opens, in what has been a light week for economic news.

The University of Michigan Index of consumer sentiment for early November is expected to rise to 69 from 67.7, according to consensus estimates from economists surveyed by

Companies: Before the opening bell, retailer JC Penney (JCP, Fortune 500) reported third-quarter earnings of 19 cents per share on $44 million in net income, topping analyst expectations.

The jump in net income represents a 63% increase year-over-year for the company. JC Penney said it expects strong sales heading into the crucial holiday shopping season. Shares of JC Penney were little changed in premarket trading.

Walt Disney Company's (DIS, Fortune 500) results were unexpectedly released about 30 minutes before the market closed Thursday. The company said profits fell in the third quarter, missing analysts estimates.

Northrop Grumman (NOC, Fortune 500) said early Friday that it would reduce its workforce by 380 salaried employees at its Newport News, Va., shipbuilding facility. The reductions are effective immediately.

Currencies and commodities: The dollar strengthened against the British pound, but fell against the Japanese yen and the euro.

Currency has been a hot topic for the G-20 summit, and the leaders declared at the close of the meeting an effort to "refrain from competitive devaluation of currencies." An issue both former chairman of the Fed Alan Greenspan and U.S. Treasury Secretary Timothy Geithner don't see eye-to-eye on.

Oil for November delivery slipped $1.78 to $86.03 a barrel.

Gold futures for December delivery fell $18.80 to $1,384.50 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury dropped, pushing the yield up to 2.63%. The Treasury market was closed Thursday for the Veteran's Day holiday.  To top of page

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