BLBG: Futures Indicate S&P 500 to Fall Third Day on Global Growth Fear
U.S. stock-index futures slid, indicating equities will extend losses for a third day, as concern mounts over China and its impact on emerging markets and global growth.
Standard & Poor’s 500 Index E-mini contracts expiring in September fell 0.8 percent to 2,056.25 at 7:28 a.m. in New York. Dow Jones Industrial Average futures lost 144 points, or 0.8 percent, to 17,141.
The rout in emerging-market stocks deepened as Kazakhstan abandoned its currency trading peg, joining Vietnam after China’s devaluation. Currency weakness and a slowdown in Chinese growth prompted Citigroup Inc. to cut its 2016 global growth forecast to 3.1 percent from 3.3 percent, its third consecutive downgrade, while holding its 2015 estimate at 2.7 percent.
“There is a continuous negative newsflow coming from China and Asia, commodity prices are declining; this all contributes to pessimism about the health of the global economy,” said Steven Santos, a broker at Banco de Investimento Global SA in Lisbon. “This negative momentum will continue to weigh on U.S. equities.”
Slower global economic growth may cause the Federal Reserve to delay its first interest-rate increase in almost a decade, as minutes released yesterday showed officials are concerned about stubbornly low inflation even as the job market improves.
Traders are now pricing in a 38 percent probability of a rate move at the September meeting, down from 50 percent before the release of the minutes.
Economic Data
Investors will also look to economic reports today for indications of the trajectory of interest rates. Economists forecast that jobless claims fell in the week ended Aug. 15, while the pace of existing-home sales declined in July, and a measure of business confidence rose this month.
Gap Inc., Salesforce.com Inc, and Hewlett-Packard Co. are among five companies posting results today. As the earnings season winds down, about 74 percent of the S&P 500 members that have reported so far beat profit estimates, while 49 percent topped sales projections. Analysts now expect a 2.1 percent drop in second-quarter earnings.
Among shares active on corporate news, Walt Disney Co. fell 2.1 percent in pre-market New York trading after Sanford C. Bernstein & Co. downgraded the entertainment company to market perform from outperform.
Tesla Motors Inc. retreated 1.3 percent after the electric-car company said the underwriters of its secondary stock sale exercised their option for additional shares. The shares were sold at a discount.
