By Barbara Kollmeyer, MarketWatch

China's PMI takes a bite out of Japanese stocks

MADRID (MarketWatch) -- Stock futures fell Tuesday, indicating Wall Street could struggle to build on a positive session, as investors waited on service-sector and factory-order data and after downbeat numbers out of China sapped momentum.

Futures losses came even amid gains for some shares. Gannett Co. Inc. rose in premarket after announcing a plan to split the company, while Office Depot Inc. also put on a strong performance after results.

Futures for the Dow Jones Industrial Average (DJU4) fell 32 points to 16,454, while those for the S&P 500 index (SPU4) eased 5 points to 1,926.90. Futures for the Nasdaq-100 index (NDU4) dipped 10 points to 3,886.75.

The Institute for Supply Management's nonmanufacturing index, due at 10 a.m. Eastern Time, is projected to climb to 56.5% in July, from 56% in June. That would indicate continued growth in the service sector, though the index's readings on hiring intentions and employment may get more attention.

At the same time, factory orders from June will be released. They are expected to rebound from a 0.5% drop in May to a 0.6% gain.

Weak data out of China could be a talking point for traders on Tuesday. The Nikkei 225 index fell to its weakest closing level in more than a week, after the HSBC China services purchasing managers index came in at the lowest reading in the nearly nine-year history of the index. China is a big export market for Japan manufacturers. The rest of Asia also finished mostly lower.

Earnings, deal in focus

Shares of Gannett (GCI)(GCI) rose 7% in premarket after the company said it will spin off its publishing business, creating two separate publicly traded companies, and confirmed it will buy full ownership of Cars.com for $1.8 billion.

Shares of Office Depot Inc. (ODP) jumped 10% in premarket action on results, while earnings news also lifted Coach Inc. (COH)(COH) by nearly 7% and CVS Caremark (CVS) by 2%. See also: Office Depot mentioned in Goldman Sachs note from July 22

Shares of American International Group Inc.(AIG) rose nearly 2% premarket, after the insurer easily beat Wall Street forecasts with its results late Monday.

But shares in Motorola Solutions Inc. (MSI) fell nearly 7% after the networking-systems company reported a drop in second-quarter sales and guidance for the current period came in weaker than expected.

The Walt Disney Co. (DIS) will report fiscal third-quarter results after the market closes, and analysts expect profits to rise. Marvel Studios, owned by Disney, saw a blockbuster opening weekend for "Guardians of the Galaxy". See earnings preview for Disney

Bulls or bears in control?

Wall Street stocks recouped some of last week's heavy losses on Monday, with the S&P 500 (SPX) closing up 0.7% to 1,938.99, its first gain in three sessions. The Dow Jones Industrial Average (DJI) finished up 0.5% to 16,569.28, snapping a four-day losing streak.

Some strategists said this week could determine whether the bulls or bears are in control after last week's sizable selloff, tied to the view that a sooner-than-expected rate hike is on the cards.

"The trading action of the rally [Monday] was similar to that of previous rebounds during the 'buy the dip' environment," said Michael O'Rourke, chief trading strategist of Jones Trading, in a note to investors. The ensuing short scramble was "so aggressive that Russian's sabre rattling" -- news that it had 160 tanks and 33,000 troops on Ukraine's border -- "didn't even cause a blip."

O'Rourke added that important resistance for S&P 500 is at 1,960, with support at 1,930 and 1,920. (Also see: What is next for the S&P 500, 1,800 or 2,000? http://www.marketwatch.com/story/what-is-next-for-the-sp-500-1800-or-2000-2014-08-04.)

In other markets, European stocks took some inspiration from Wall Street gains on Monday. September futures contracts for both crude oil (CLU4) and gold (GCU4) were up slightly, while the dollar (DXY) was holding steady.

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