U.S. stocks: Futures fall on oil worries, Fed rate-hike talk
Madrid (Dec 9) U.S. stock futures pointed to a rough start for Wall Street on Tuesday, amid fresh speculation the Federal Reserve may be close to pulling back its pledge to keep rates low, and sagging global markets, with China particularly hard hit.
Futures for the Dow industrials DJZ4, -0.70% fell 61 points, or 0.3%, to 17,790, while those for the S&P 500 index SPZ4, -0.71% dipped 7.2 points, or 0.4%, to 2,052.20. Futures for the Nasdaq-100 index NDZ4, -0.82% slid 16.50 points, or 0.4%, to 4,262.50.
On Monday, the S&P 500 SPX, -0.73% suffered its biggest one-day slide in seven weeks, dogged by a selloff in energy companies and downbeat global economic reports.
Oil prices CLF5, +0.59% were rebounding from five-year lows early Tuesday, but action was volatile. Both Jefferies and Macquarie slashed their prices for the commodity, saying more pain is coming.
Fed rate-hike worries redux: In an article that published late Monday in The Wall Street Journal, Jon Hilsenrath said Fed officials meeting next week will likely affirm a plan to start raising short-term interest rates in 2015 and are debating losing a key phrase, that rates will stay low for “a considerable time.”
This report comes on the heels of Friday’s U.S. jobs report, which indicated wages are picking up again and the economy is returning to some sort of normalcy.
The markets should be reading this as a sign the economy is recovering well and no longer needs such central-bank support, said Craig Erlam, market analyst at Alpari U.K., in a note.
“However, with stock markets trading at record high levels as investors search for yield and Treasuries also trading near highs, the actual reality is that we may need to see markets correct, something all investors appear to be perfectly aware of and fearing,” he added.
The National Federation of Independent Business’s November report is scheduled to publish at 7:30 a.m. Eastern Time. At 10 a.m. Eastern, job openings and wholesale inventories for October will be released.
Stocks to watch: AutoZone Inc. AZO, -1.17% will report earnings early Tuesday. Burlington Stores Inc. BURL, -1.77% and Krispy Kreme Doughnuts Inc. KKD, -2.62% are also on the docket.
Bluebird Bio Inc BLUE, +60.32% surged 45% after the company reported promising trial results for an experimental gene therapy to treat patients with an inherited blood disorder.
Analysts at Jefferies downgraded Schlumberger Ltd. SLB, -0.42% Oceaneering International Inc. OII, -5.10% and Nabors Industries Ltd. NBR, -7.33% to hold from buy, as they lowered estimates and price targets across the oil services and equipment sector to account for lower oil prices. Jefferies cut its Brent price to $72.25 a barrel from $90 a barrel for 2015.
Global markets under pressure: The Stoxx Europe 600 index SXXP, -1.57% fell more than 1%, hit by weak German trade data and energy-stock losses. The FTSE 100 index UKX, -1.62% slid on fears that China will cut its growth forecast, which hit commodity-related stocks. Greek stocks GD, -9.93% fell sharply as a high-stakes vote for presidency was brought forward. National Bank of Greece SA NBG, -2.03% fell 8% in premarket trading.
It was a high-drama day in Asia. The Shanghai Composite Index SHCOMP, -5.43% swung from a a 2.4% rise to a closing loss of 5.4%. China’s stocks, currency CNYUSD, -0.25% and corporate bonds were hit hard after Beijing banned investors from using low-grade corporate debt as collateral to borrow cash.
Gold prices GCG5, +1.56% surged as investors backed off stocks, and the yen USDJPY, -0.81% regained some safe-haven bids as well inching up against the dollar.
Source: MarketWatch
