New York: US stock index futures tumbled on 16 August, mirroring steep declines in Asian and European markets, after the latest sign the Federal Reserve is reluctant to cut rates in the midst of markets’ turbulence.
Global stock markets have fallen sharply as investors increasingly shy away from risky assets after trouble in the US subprime mortgage market has resulted in a drying up of credit in broader markets.
But the market turmoil has not undermined the US economy and there is no need for an inter-meeting rate cut, William Poole, St. Louis Federal Reserve Bank president, said after Wednesday’s stock market close.
“Up until now we’ve had the anomaly of stocks continuing to perform while these instruments create problems. But now it’s beginning to catch up, particularly when you have a Fed that is not going to take the same easing steps they used in 1998,“ said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.
The market’s plunge on Wednesday pushed the Dow below the 13,000-level for the first time since April 24 and wiped out the S&P 500 index’s gains for the year.
Investors will get an indication of the state of the housing market when the Commerce Department releases figures on US housing starts and building permits for July.
Weekly jobless claims data is also set for release at the same time.
S&P 500 futures were down 18 points, below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures sank 131 points, and Nasdaq 100 futures lost 23.75 points.
Department store chain J.C. Penney Co. Inc. will release its quarterly results on Thursday. Other earnings on deck include cosmetics maker Estee Lauder Cos. Inc. and rival Elizabeth Arden Inc.