BLBG: U.S. Index Futures Rebound as Investors Pause After Selloff
U.S. stock-index futures rebounded, as investors paused after a selloff sent equities to a one-month low, before economic reports that may give further indications of the trajectory of interest rates.
Standard & Poor’s 500 Index E-mini contracts expiring in December rose 0.5 percent to 1,880.5 at 6:21 a.m. in New York, reversing an earlier drop of as much as 0.6 percent. Stocks slid on Monday as global equities tumbled amid a rout in commodity and biotechnology shares. Futures on the Dow Jones Industrial Average increased 50 points, or 0.3 percent, to 15,959, today.
“The recent decline in prices was just a short-term correction and won’t produce a recession and so we view it as a buying opportunity,” said Raimund Saxinger, who helps manage $18 billion as a fund manager at Frankfurt-Trust Investment GmbH. “In the developed market, the economies continue recovering.”
Stocks have been volatile in recent weeks amid confusion over the Federal Reserve’s rate tightening policy and concern an economic slowdown in Asia will curb demand for commodities and global growth. The S&P 500 is down 8.8 percent in the third quarter, poised for its worst fall since 2011. The benchmark is almost 12 percent below its all-time high set in May.
The turbulence underscores the disparity between investors confident in the U.S. economy and those concerned about sliding commodity prices and slowing Chinese growth. Fed officials insist the recovery has sufficient momentum to cope with higher interest rates. Still, the selloff in U.S. shares has prompted two of the bull market’s biggest cheerleaders to cut their year-end forecasts for the S&P 500 by as much as 9.7 percent.
The Chicago Board Options Exchange Volatility Index has closed above 20 for the past 26 sessions, the longest streak since January 2012. The measure of market turbulence known as the VIX climbed 17 percent on Monday to 27.63, a three-week high.
Investors will look to data today for indications of the Fed’s likely actions. Economists forecast an S&P/Case-Shiller measure of house prices increased in July, while consumer confidence slipped in September. Traders are split on whether the Fed will raise rates this year. They are pricing in about a 41 percent chance of an increase in December, and a 48 percent probability in January.
Micron Technology Inc. added 1 percent in early New York trading after Wells Fargo raised its rating to the equivalent of buy. Yahoo Inc. rose 3.4 percent after saying it’s on track to spin off its stake of about $22 billion in Alibaba Group Holding Ltd. this year. Fiat Chrysler Automobiles N.V. gained 1.1 percent as carmakers in Europe rebounded.
