Stocks: Brace for a big hit

NEW YORK (CNNMoney.com) -- U.S. stocks were poised to fall steeply Monday amid growing anxiety about the strength of the global economic recovery.

At 8:42 a.m. ET, Dow Jones industrial average, Nasdaq 100 and Standard & Poor's 500 futures were sharply lower.

Futures measure current index values against their perceived future performance and offer an indication of how markets may open when trading begins.

Wall Street's five-month rally recently ran out of steam, as investors stopped rewarding better-than-expected news about the economy and honed their expectations to signs of an economic recovery.

The S&P 500 has risen 50% off its March 9 lows, but investors seem to have lost their enthusiam. The Dow Jones industrial average, S&P 500 and the Nasdaq all lost about 1% on Friday.

David Jones, chief market strategist at IG Markets, said that U.S. futures were mimicking the sell-off of European and Asian markets, sparked by a government report showing that the Japanese economy is "recovering, but not at the pace that was expected" and a "less than optimistic outlook for China."

"I think the markets were ripe for some type of selloff at these levels," said Jones.

In Asia, Hong Kong's Hang Seng index dived nearly 5%, and Tokyo's Nikkei index lost more than 3%. Major markets in Europe were all down about 2% in morning trading.

Economy: Concerns about consumer confidence and the jobless rate are likely to keep weighing on investors.

A survey on manufacturing in the New York area was unexpectedly strong. The Empire State Manufacturing Survey, released before the opening bell, rose to 12.1 in August, compared to -0.6 in July, according to the Federal Reserve Bank of New York. It was the biggest increase since November 2007.

Companies: Stocks to watch include retailer Lowe's (LOW, Fortune 500). The retailer of home improvement products reported diluted earnings per share of 51 cents for the fiscal second quarter, a 19% decline from the year-ago EPS of 63 cents. The company, in a press release, blamed "the challenging economic environment."

Lowe's shares fell 9% in premarket trading.

Charles Schwab (SCHW, Fortune 500) was also in focus. New York state attorney general Andrew Cuomo was expected to file a lawsuit against the brokerage firm related to auction-rate securities, according to the Wall Street Journal.

Money and oil: The dollar rose versus the euro and the British pound, but slipped against the yen. The price of oil dropped $1.64 a barrel to $65.87.