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Aug 29, 2016

U.S.Stock Market Future Indications, by MarketWatch - August 29, 2016: U.S. Stocks Face Uncertain Day as Investors Adjust to Possibility of Fed Hikes


www.marketwatch.com
marketwatch.com
 
Barbara Kollmeyer
 
Stock futures struggled for traction on Monday after last week’s speech by Federal Reserve Chairwoman Janet Yellen revived expectations that the central bank could raise interest rates by the end of this year.

Dow Jones Industrial Average futures YMU6, +0.04%  slipped 2 points to 18,378, while S&P 500 futures ESU6, +0.08%  rose 0.60 point to 2,168.75. Nasdaq 100 NQU6, +0.08%  futures were off 0.75 point at 4,785.
Equities struggled across the globe on the view U.S. rates may rise in the near term and make the cost of borrowing more expensive, potentially slowing corporate expansion. Japanese stocks, however, bucked the downbeat trend as the yen USDJPY, +0.45%  tumbled against the dollar on the fresh Fed thinking. The yen moved triggered a 2.3% rally for the Nikkei 225 index NIK, +2.30%  . In Jackson Hole, Wyo., on Friday, Yellen noted signs of improvement in the U.S. economy and hinted a rate increase is in the cards in coming months.
Those comments pushed the Dow industrials and the S&P 500 lower on Friday, though the Nasdaq finished higher. Investors also paid close attention to a CNBC interview that same day with Fed Vice Chairman Stanley Fischer who said Yellen’s speech was “consistent” with possibly two rate hikes this year.
Read: For now, negative rates are off the table for Fed
Mixed Fed messages? Focus will now turn to this Friday’s nonfarm payroll data for August. “Following two months of stellar jobs gains in June and July, we believe that another solid report could amplify further the case for a move this year, perhaps as early as at the next gathering,” said Charalambos Pissouros, senior analyst at IronFX Global, in a note to investors.
Economic preview: U.S. job creation sticks to fast lane even as economy drops below speed limit
The market is currently pricing in a 33% probability for a rate hike at the September Fed meeting and an almost 60% chance for it happening in December, according to the CME Group FedWatch tool.
But some accused the Fed of sending mixed signals. “I still think one needs a Bletchley Park code book to decipher the Fed’s policy. I know I am not the brightest pin in the box, but I am all over the place with Fed talk,” said David Buik, market commentator at Panmure Gordon & Co, in a note to clients.
Economic data on the calendar for Monday include personal income and consumer spending, along with core inflation for July, all due at 8:30 a.m. Eastern Time.
Stocks to watch: Caesars Entertainment Corp. CZR, -0.40% the parent company of the bankrupt Caesars Entertainment Operating Co., cannot shield itself from about $11 billion in claims from bondholders, a judge said Friday, according to Reuters. Shares tanked 12% in premarket trade on Monday.
Shares of Mylan NV MYL, +0.42%  climbed 2.2% ahead of the bell as the drugmaker said it will launch a cheaper, generic alternative to EpiPen after running into stark criticism for dramatically raising the price of the lifesaving drug.
Other markets: Gold prices GCZ6, -0.22%  drifted south on Monday, picking up from last week’s losses, as the dollar gained. While prospects for higher rates can boost the dollar, they depress the value of precious metals that are priced in the currency.
Crude oil CLV6, -1.68%  slumped 1.5%, also pressured by the stronger dollar.
Sara Sjolin contributed to this article