Stock Futures Decline Ahead of Fed Meeting
NEW YORK (TheStreet) -- Stock futures were pointing to a lower start for Wall Street Monday as investors awaited the kickoff Wednesday of the two-day Federal Reserve meeting, at which further stimulus measures are widely expected following Friday's dismal jobs report.
Meanwhile, the market mood was dealt a blow Monday with a set of weaker-than-expected China trade data.
Futures for the Dow Jones Industrial Average were falling 18 points, or 20.64 points below fair value at, at 13,278. Futures for the S&P 500 were down 2.49 points, or 1.31 points below fair value, at 1435. Futures for the Nasdaq were down 4.75 points, 6.06 points below fair value, at 2818.
On Monday, China's customs bureau said that Chinese imports declined 2.6% year over year in August, missing the 3.5% increase economists in a Reuters survey were expecting, and stoking worries about slowing demand in the world's second-largest economy."Slowing real domestic demand in China was the key factor, consistent with the soft activity data in the past few weeks," commented Societe Generale economists. Exports rose 2.7%, weaker than the prediction of a 3% increase. The major U.S. equity averages finished a banner week with mild gains on Friday, extending multi-year highs, as investors looked ahead to the potential for more stimulus from the Fed in light of the shortfall in nonfarm payrolls. Friday's weak employment data "added further weight to our call for QE3 and an extension beyond late-2014 of the low rate period at the September 12-13 FOMC," said Societe Generale economists. "On QE3, we expect the Fed to announce a program focusing on both Agency-MBS (Mortgage-Backed Securities) and Treasuries, but rather than pre-announcing an amount we believe that the Fed may opt to announce a time period allowing for greater flexibility." Even a warning from chip giant Intel (INTC) wasn't enough to spark a round of profit-taking Friday after Thursday's robust rally on enthusiasm about the European Central Bank's own bond-buying plan. "The markets do not like uncertainty and Mario Draghi exposed some of the plans to absorb the effect of the debt problem in Europe for the time being," said Brian Amidei, partner and managing director at HighTower. "This is yet another band-aid on a large wound that needs proper mending. It will buy some time for a cure but there are still many systemic challenges ahead. For now, the markets should have had a positive response." The economic calendar in the U.S. Monday includes the consumer credit report at 3 p.m. EDT. Economists expect that consumer credit rose by $10 billion in July after expanding by $6.5 billion in June. The FTSE in London was up 0.09% Monday, while the DAX in Germany was up 0.06%. The Hong Kong Hang Seng index finished up by 0.13% and the Nikkei in Japan closed down 0.03%. The benchmark 10-year Treasury was lower by 2/32, raising the yield to 1.679%. The greenback was up 0.10%, according to the dollar index. October crude oil futures were down 24 cents at $96.18 a barrel and December gold futures were down $7 at $1,733.50 an ounce. On the corporate front, AIG (AIG) said the U.S. Treasury Department is selling $18 billion worth of its common shares to institutional investors. Shares were falling more than 1.5%. BP (BP) is nearing a deal to sell some of its oil fields in the Gulf of Mexico to Plains Exploration & Production (PXP) for about $7 billion. Shares were up 0.14%. JPMorgan Chase (JPM) directors are considering lower 2012 bonuses for CEO Jamie Dimon and other top executives in the wake of a multbillion-dollar trading scandal, while the board of Citigroup (C) is expected to decide this fall how to fine-tune next year's compensation plan to win broader support among investors, people familiar with the situation told the Journal. JPMorgan shares were trading sideways, and Citigroup shares were down 0.3%. Transocean (RIG) agreed to sell 38 shallow-water drilling rigs to Shelf Drilling International for $1.05 billion. Shares were gaining more than 1%.
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