BLBG: U.S. Stock-Index Futures Signal Rebound After S&P 500's 3% Drop
U.S. stock-index futures maintained gains after data showed a lower-than-estimated rise in private payrolls last month.
Standard & Poor’s 500 Index E-mini futures expiring this month rose 0.6 percent to 1,927.25 at 8:18 a.m. in New York, and climbed as much as 1.2 percent earlier.
Companies in the U.S. added 190,000 workers to payrolls in August, figures from the ADP Research Institute in Roseland, New Jersey, showed Wednesday. The median forecast of economists surveyed by Bloomberg called for 200,000 advance. The July reading was revised to 177,000 after a previously reported 185,000 increase.
The S&P 500’s 3 percent decline on Tuesday -- its third-biggest of 2015 --marked a sour start to what has historically been the worst month of the year. The equity gauge falls 1.1 percent on average in September, according to data compiled by Bloomberg going back to 1927. Another troubling sign is that futures on Chicago Board Options Exchange Volatility Index have climbed, showing traders predict turbulent markets will endure.
“Volatility will stay high for a while,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit in Hellerup, Denmark. “China is still making people panic and a lot of us are concerned that we’ll break the lows from last week. But many companies are starting to look very cheap now and the market will eventually find a support level, especially if the Fed doesn’t raise rates this month.”
The S&P 500 slumped 6.3 percent in August as China’s currency devaluation spurred concern over global growth, erasing more than $5.7 trillion in equity market values worldwide, while volatility surged the most on record. The equity index entered a correction last week, only to then rally more than 6 percent over two days. It closed Tuesday 10 percent below its all-time high set in May.
“It’s difficult to find an end to the volatility,” Tom Rivers, a Hong Kong-based fund manager at UBS Group AG’s global asset management unit, told Bloomberg TV. “That being said, we could well find a bottom to markets in the next week or two. From a longer-term perspective, undoubtedly equity markets will be higher in the next 9-12 months.”
Chinese shares ended lower on the last trading day of this week as investors assessed the level of state support before a major military parade on Thursday. Mainland markets will be closed Thursday and Friday to commemorate the end of World War II.
Amid continuing concerns that China’s slowdown will weigh on the global economy, traders are now pricing in a 34 percent chance that the Federal Reserve will raise rates this month, down from 38 percent on Monday. Attention will focus on the government’s August jobs report, due Friday, as a major data point before the Fed’s meeting. Separate data today may show growth in factory orders slowed in July, according to economists surveyed by Bloomberg.
