US stocks set for day in the red ahead of FOMC minutes, Alcoa earnings
New York (July 8) US stock-index futures pointed sharply lower Wednesday, as investors grappled with a major selloff in Chinese shares, jitters over Greece and the coming Federal Reserve minutes.
The unofficial start to the earnings season, which comes with Alcoa’s report after the market close on Wednesday, was also weighing on investors’ minds.
Futures for the Dow Jones Industrial Average YMU5, -0.72% dropped 95 points, or 0.5%, to 17,585, while those for the S&P 500 index ESU5, -0.68% lost 11.70 points, or 0.6%, to 2,062. Futures for the Nasdaq-100 index NQU5, -0.68% shaved off 24 points, or 0.5%, to 4,398.50.
China selloff: The moves come against a backdrop of sharp losses in the Chinese stock markets, where more than 40% of the country’s listed companies were suspended for trade at the start of the session. The Shanghai Composite Index SHCOMP, -5.90% has now shaved off more than 30% of its value over the past month, amid a sharp correction in the country’s financial markets. Read: China’s government had no reason to intervene in the stock market
Greece is still the word: The Greek debt crisis remains a focus after Tuesday’s Eurogroup meeting and eurozone leaders’ summit concluded without progress on a bailout deal. The EU has now given Athens a deadline of Sunday to produce a credible reform proposal and reach an agreement with lenders, or risk sliding into bankruptcy and a eurozone exit.
Greek Prime Minister Alexis Tsipras told the European Parliament on Wednesday that the government will present a detailed reform list in coming days. Meanwhile, Athens submitted a request for aid through the eurozone’s bailout fund, the European Stability Mechanism.
Greece’s banks and stock markets remained shut on Wednesday, but the Global X FTSE Greece 20 ETF GREK, +1.49% shaved off 3.8% premarket. European markets traded mixed.
U.S. stock markets got a late-session boost on Tuesday to close higher, following news reports that Tsipras had put forward a proposal for interim financing until the end of July.
FOMC minutes: The Federal Open Market Committee releases minutes from its June meeting, which could help shed light on the central bank’s thoughts on the timing of its first rate increase.
“The FOMC minutes have…potential to move the dollar, where investors will want to see how improved inflation prospects and wage growth might translate into greater potential for a September rate hike,” said Angus Campbell, senior analyst at FxPro.
“But given the dovish bias to growth forecasts, and external threats to the U.S. economy that remain, we feel September is too early for the Fed to make its first move,” he said.
The ICE dollar index DXY, -0.12% was down 0.3% at 96.62 ahead of the market open.
Source: MarketWatch
