BLBG: U.S. Stock-Index Futures Retreat as Investors Await Fed Minutes
U.S. stock-index futures slipped following the steepest equity selloff in four weeks, amid rising wagers that borrowing costs will increase this year as investors awaited further hints from minutes of the Federal Reserve’s latest policy meeting.
S&P 500 Index contracts expiring in December fell than 0.3 percent to 2,128 at 8:34 a.m. in New York, and those on the Dow Jones Industrial Average lost 62 points to 18,008. The underlying gauges slumped yesterday, spurred by concerns that profits will be slow to rebound after Alcoa Inc. posted results that missed analysts’ estimates.
The release came as projections called for a sixth quarter of falling earnings, while speculation intensified that the Fed will raise borrowing costs this year. Investors will scrutinize minutes of the central bank’s September gathering due at 2 p.m., with the odds of a move in December climbing to 68 percent from 50 percent two weeks ago. Traders are pricing in a 17 percent chance of a raise next month.
“Some investors are a bit nervous,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “Hiking once is fine, but a series of increases could hurt the market. While good for banking, it means higher financing costs, which means lower profits for firms.”
Recent economic data beating forecasts and comments by Fed officials have fueled bets that the central bank will proceed to increase interest rates this year. Fed Bank of New York President William Dudley and Fed Bank of Kansas City President Esther George are scheduled to speak on Wednesday. Investors will also watch reports on retail sales, consumer sentiment and producer prices due on Friday.
Freight company CSX Corp. will release earnings after Wednesday’s market close, while Delta Air Lines Inc., JPMorgan Chase & Co. and Citigroup Inc. are among those scheduled to report this week. Analysts forecast a profit drop of 1.6 percent for S&P 500 companies in the third quarter.
After surging as much as 7.2 percent this year through a record in August, the S&P 500 has failed to push higher. On Tuesday, the gauge closed at an almost one-month low, while the CBOE Volatility Index surged 15 percent. The measure of expected stock-price swings added 4.7 percent on Wednesday.
Among stocks moving in early New York trading, Fortinet Inc. slumped 14 percent after the security technology firm reported preliminary quarterly earnings and revenue that missed estimates.
