Stock futures pointed to opening losses for Wall Street on Monday, as a rocky month closes out with fresh worries over China and no clear view on whether the U.S. Federal Reserve will hike U.S. interest rates in September.
Futures for the Dow Jones Industrial Average YMU5, -0.80% slid 161 points, or 1%, to 16,498, while those for the S&P 500 index ESU5, -0.80% ESU5, -0.80% dropped 18.95 points, or 1%, to 1,970.50. Futures for the Nasdaq-100 index NQU5, -0.66% fell 33.50 points, or 0.8%, to 4,299.25.
The Shanghai Composite dropped 12.5% for August as it lost more ground on Monday. Stocks were hit by a report in the Financial Times that the Chinese government will no longer make large stock purchases to prop up the markets.
”It seems like we simply need a reason to panic these days,” Chris Weston, chief market strategist at IG, said in a note.
Investors had to know that the government wasn’t going to keep pouring money into stock markets, he wrote. “Still, the fact that the mainland markets are down seems driven by the idea that officials have moved a more reactive function and there is a general concern of policy missteps.”
Jon Hilsenrath: Three takeaways from the Fed meeting(1:42)
After a week of market upheaval and speculation about whether the Federal Reserve will raise rates , WSJ chief economics correspondent Jon Hilsenrath discusses three takeaways from the Fed’s annual meeting in Jackson Hole, Wyoming.
Meanwhile, the weekend economic symposium in Jackson Hole, Wyo., sponsored by the Federal Reserve Bank of Kansas City, only “increased the level of uncertainty” over the next move in U.S. interest rates, said Nour Al-Hammoury, chief market strategist at AG, in a note. “The markets are waking up to the realty that there is no clear direction being set by the bankers or the Fed.”
While an increasing number of investors believe recent market turmoil could help delay a near-term U.S. rate hike, Vice Chairman Stanley Fischer over the weekend seemed to open the door for a move, suggesting that markets might calm down quickly.
Analysts said investors would be looking to Friday’s nonfarm payroll jobs data for the next clues about what will happen at September’s Fed meeting. A disappointing number could lend credence to those who believe the Fed should not rush into raising rates.
The only data scheduled for Monday is the Chicago Purchasing Managers’ index, due for release at 9:45 a.m. Eastern Time.
A rough August for stocks: Stocks logged modestly weekly gains on Friday after closing mixed on the day. Fresh in investor’s minds is the fact that a week ago on Monday, the Dow industrials DJIA, -0.07% lost 1,000 points in a matter of minutes as concerns over China tormented the market.
With one day of trading still to go, the Dow industrials and S&P 500 index are each poised to log the biggest one-month point losses since October 2008 and the biggest one-day percentage falls May 2012. Through Friday, the DJIA has lost 1,046.85 points, or 5.92%, while the S&P 500 SPX, +0.06% has lost 114.97 points, or 5.46%.
Nonetheless, Goldman Sachs is sticking to its year-end 2015 S&P target of 2,100, which reflects upside of 6% from here, David Kostin, its chief U.S. equity strategist, said in a note on Monday. “Continued positive macro data will be essential if our forecast is to be realized,” he said.
Kostin said a risk to that forecast would be negative earnings preannouncements during the last two weeks of September, ahead of the third-quarter reporting season.
Stocks to watch: Staples Inc. SPLS, +0.22% and Office Depot ODP, -0.76% said late Friday they will delay the closing of their merger in order to provide the Federal Trade Commission with more information on the deal.
Executives at Apple Inc. AAPL, +0.33% are considering a price for the next generation of Apple TV that would be more than double the cost of the current $69 being charged currently, according to 9to5Mac.com, citing sources.
Other markets: Japan’s Nikkei 225 index NIK, -1.28% dropped 1.3%, and lost 8.2% for the month of August. The Europe Stoxx 600 index SXXP, -0.09% dropped 0.8%, with the German DAX 30 index DAX, -0.58% down over 1% as major oil companies across Europe dropped. U.K. markets are closed for a holiday.
Crude for October delivery CLV5, -1.88% fell $1, or 2.2%, to $44.22 a barrel, while Brent crude LCOV5, -2.46% for the same month slid $1.32, or 2.7%, to $48.73 a barrel. The dollar DXY, +0.02% was marginally weaker across major currencies, while gold prices GCZ5, -0.17% were also marginally off.