BLBG: U.S. Index Futures Fall as Rate Decision Spurs Economy Concerns
Netflix, Yahoo, Morgan Stanley fall in premarket trading
Stocks may be subject to swings today from quadruple witching
U.S. stock-index futures fell as investors speculated the Federal Reserve’s refusal to raise rates bespeaks larger concerns about the strength of the global economy.
Standard & Poor’s 500 Index E-mini contracts expiring in December lost 1 percent to 1,957.75 at 7:32 a.m. in New York, reversing an advance of 0.3 percent. Futures on the Dow Jones Industrial Average dropped 164 points, or 1 percent, to 16,394 today.
“Markets are sensing that the Fed is not only worried about the U.S. economy, but also global growth,” said Pedro Ricardo Santos, a broker at X-Trade Brokers DM SA in Lisbon. “There are very real reasons for concern on this front. Without doubt things have changed. The Fed would have to hike in 2016.”
Fed Chair Janet Yellen kept interest rates on hold Thursday and sounded caution over slowing growth in China. While she said most policy makers still expect a rate increase this year, central bank officials said in a statement that “recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.”
Traders are now betting on the outcomes of the Fed’s October and December meetings -- odds of a move higher are 18 percent and 46 percent, respectively. Reports due next week on home sales and durable goods orders might help gauge the state of the U.S. economy. A release today may show an index of leading economic indicators rose in August, after falling the prior month.
Equity markets have been turbulent amid concerns about a China slowdown and the Fed’s intentions. While the Chicago Board Options Exchange Volatility Index has almost halved since its high last month, it’s still 31 percent above its 12-month average.
The VIX, as the gauge is known, has lost 8.9 percent this week, heading for its first two-week drop since May. The S&P 500 is poised for its first back-to-back weekly gains since June, up 1.5 percent.
Some futures and options on stocks and indexes expire today in a process known as quadruple witching, which may increase stock volatility.
Netflix Inc. and Yahoo! Inc. paced losses among technology shares in premarket trading, down at least 2 percent, while Morgan Stanley and JPMorgan Chase & Co. each declined 1 percent.
Among stocks moving on corporate news, Adobe Systems Inc. slipped 2.9 percent after the company’s forecast for fiscal fourth-quarter sales and profit missed estimates.
