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Dec 21, 2018

Before the Bell: US futures point to modest gains at the open after a steep two-day sell-off

Thomas Franck

U.S. stock index futures pointed to marginal gains on Friday, leaving the major equity indexes on track for a dismal end to the week.
At around 7:45 a.m. ET, Dow Jones Industrial Average futures implied an uptick of around 15 points at the open. Both the S&P 500 and Nasdaq futures also pointed to slight opening gains.
On Thursday, the Dow Jones Industrial Average dropped 464.06 points to close at 22,859.6 — bringing its two-day declines to more than 800 points and its 5-day losses to more than 1,700 points. The S&P 500 shed 1.58 percent to end the trading day at 2,467.41 while the Nasdaq Composite fell 1.6 percent and closed at 6,528.41 after dipping into bear market territory during the session. The Cboe Volatility Index — one of Wall Street’s best gauges of marketplace fear — rose above 30 on Thursday, its highest level since February.
The Dow and S&P 500, which are both in corrections, are on track for their worst December performance since the Great Depression in 1931, down more than 10 percent each this month. The S&P 500 is now in the red for 2018 by 7.7 percent.
On the data front, investors are likely to monitor a flurry of economic reports on Friday. Durable goods and personal income figures for November are both scheduled to be released at around 8:30 a.m. ET.
Philly Fed non-manufacturing data and a final reading of consumer sentiment for December are due to be published later in the trading session.
Government shutdown concerns
Sentiment was also dampened Friday after President Donald Trump aggravated fears of a government shutdown after tweeting:
“The Democrats, whose votes we need in the Senate, will probably vote against Border Security and the Wall even though they know it is DESPERATELY NEEDED. If the Dems vote no, there will be a shutdown that will last for a very long time. People don’t want Open Borders and Crime!”
Equities fell to their lows of the day on Thursday after U.S. House of Representatives Speaker Paul Ryan announced that President Donald Trump would not sign a temporary government funding resolution without funding for a U.S.-Mexico border wall.
Later on Thursday, the House passed a temporary spending bill with more than $5 billion for Trump’s border wall — an inclusion which will likely impede its ability to clear the Senate.
The Senate had unanimously approved a bill Wednesday night to keep the government running through Feb. 8 — without border wall money. Trump insisted Thursday that he would not sign it. It forced House Republicans to include the wall money in the new bill.
Both House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer have flatly said congressional Democrats will not approve wall money. As Republicans need Democratic votes to pass spending legislation in the Senate, a partial shutdown is all but assured if the GOP insists on funding for the barrier.
Mattis resigns
Amid concerns over a government shutdown days before Christmas, the White House was thrown into further political turmoil after Defense Secretary James Mattis resigned from his position on Thursday over disagreements with Trump.
Mattis, who is due to step down at the end of February 2019, said in a letter addressed to Trump that “because you have a right to have a Secretary of Defense whose views are better aligned with yours” on a number of subjects.
“I believe it is right for me to step down from my position,” he said.
Fed rate hike

Source: CNBC

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