US stock-index futures fall for a second day, signaling the Standard & Poors 500 would drop from record levels as investors evaluate the strength of the economy to assess the future of Federal Reserve stimulus.
Futures on the Standard & Poor’s 500 Index expiring in December dropped 0.2% to 1,762.3 at 11:45 a.m. in London. The benchmark index rose to a record on October 29 after the Fed refrained from reducing the pace of its asset-purchases last month and better-than-projected corporate earnings indicated the economy may be strong enough to withstand less stimulus. Contracts on the Dow Jones Industrial Average lost 22 points, or 0.1%, to 15,688 today. Nasdaq technology index fell 0.3% to 3,353.75.
Sentiment dropped across the board on Wednesday by weakness in global stocks. Chinese stocks in particular fell as the market reacted to Tuesday’s conclusion of the Third Plenum, a four-day meeting that sets the course for the Chinese economy for the next 10 years.
A wide spectrum of announcements were expected to emerge from the Plenum, but three in particular were repeatedly cited as missing from the communique – the lack of any promises to rein in the power of state-owned enterprises, absence of reform to the one-child policy, China’s household registration policy which prevents citizens from getting most public services outside of the city or county where they are registered.
“The disappointing results of the Plenum are likely to cause volatility for the coming week as investors reverse previous positions,” said Alex Conroy, financial sales trader at Spreadex, in a note to investors.
Investors will follow closely reports this week on U.S. jobless-benefit claims and manufacturing in the New York, in order to get some insight into Fed policy sentiment when Vice Chairman Janet Yellen testifies before the Senate Banking Committee tomorrow for her confirmation hearing to succeed Ben S. Bernanke as chairman. Fed Bank of Philadelphia President Charles Plosser will speak on monetary policy in Washington tomorrow.
In corporate world, Macy’s is projected to report third-quarter earnings today.
U.S. Steel Corp. jumped 2.7% to $27.75 in early New York trading as Morgan Stanley upgraded its recommendation on the largest U.S. producer of the metal to “overweight”, the equivalent of “buy”, from “equal weight”.
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