BLBG: U.S. Index Futures Fall, Equities Poised for Two-Day Retreat
Wide swings and rapid shifts in sentiment have taken hold
S&P 500 is moving more than 1.3 percent almost every day
U.S. stock-index futures retreated, erasing an earlier rally as volatility continues to prevail before the Federal Reserve’s policy meeting next week.
Contracts on the Standard & Poor’s 500 Index slipped 0.5 percent to 1,933 at 8:33 a.m. in New York, after earlier gaining as much as 1.3 percent. The underlying benchmark fell 1.4 percent yesterday while signs of stability in China helped ignite gains in stocks elsewhere.
“U.S. stocks have been all over the place after months of not really going anywhere,” said Steven Santos, a broker at Banco de Investimento Global SA in Lisbon. “It’s all about getting used to greater volatility and big daily swings now. You can’t really make a strong directional call on stocks before the Fed meeting next week. There’s too much uncertainty.”
Data today showed fewer Americans lined up last week to file for jobless benefits, highlighting the persistent strength of the labor market.
Claims for unemployment insurance fell by 6,000 to 275,000 in the week ended Sept. 5, from a revised 281,000 in the prior period, according to the Labor Department. The figure matched the median forecast in a Bloomberg survey of economists.
A report yesterday showed job openings surged to a record in July, as hiring cooled, a sign employers are having a hard time finding qualified workers amid tightening labor market.
Wide market swings and rapid shifts in investor sentiment have become more prevalent since China’s currency devaluation last month sparked concerns that an economic slowdown would spread. The Dow swung more than 444 points yesterday between its session high and low before closing down 239 points.
In 11 of the last 14 days, the S&P 500 has closed with a move exceeding 1.3 percent. That includes the biggest rally since 2011 as well as the deepest rout in four years. The S&P 500 has lost 8.8 percent since peaking in July, the last time the gauge closed within points of its May record.
With the timing of the Federal Reserve’s first interest-rate increase since 2006 taking center stage, traders remain confident the Fed will raise borrowing costs this year. They’re pricing in a 28 percent chance the central bank will increase rates next week, down from 48 percent before China’s devaluation, while odds of a move at the December gathering are about 60 percent, according to data compiled by Bloomberg.
