BLBG: U.S. Index Futures Retreat in S&P 500's Volatile Week Before Fed
S&P 500 up 1.6 percent this week, biggest gain since July
Volatility remains elevated before Fed policy meeting
U.S. stock-index futures fell, with equities poised to trim gains in a week of wild swings before a Federal Reserve interest-rate decision next Thursday.
Contracts on the Standard & Poor’s 500 Index slipped 0.3 percent to 1,933.25 at 8 a.m. in New York after earlier gaining as much as 0.5 percent. The underlying gauge rose 0.5 percent yesterday. Dow Jones Industrial Average futures lost 45 points, or 0.3 percent, to 16,160.
“It’s normal to have volatile markets ahead of such an important decision from the Fed,” said Ralf Zimmermann, a strategist at Bankhaus Lampe KG in Munich. “It’s been such a long time -- there are a lot of traders who have never seen a rate hike in their career. Investors are pricing in a pretty low probability of a rate hike at the moment, so the risks are more to the downside. Markets will have to live with uncertainty until then.”
A rebound in Apple Inc. yesterday helped the S&P 500 extend its weekly advance to its best since July. Market swings and rapid shifts in investor sentiment have become more prevalent, with the benchmark index closing with moves exceeding 1.3 percent in 11 of the last 15 days. That includes the biggest rally since 2011 as well as the deepest rout in four years. The S&P 500 has lost 8.3 percent since peaking in July, which was the last time the gauge closed within points of its May record.
Grabbing the most attention is the timing of the Fed’s first interest-rate increase since 2006. Traders remain confident the Fed will raise borrowing costs this year, pricing in a 28 percent chance the central bank will do so next week, down from 48 percent before China’s currency devaluation triggered concerns about global growth. Odds of a move at the December gathering are about 59 percent.
Fed policy makers have already seen the major economic data available to them before their rate decision next week. A report this morning is expected to show growth in producer prices decreased in August from the prior month, according forecasts from economists surveyed by Bloomberg. Separate preliminary data at 10 a.m. may show consumer sentiment slipped for a third month in September, according to economists’ projections.
