July 9, 2019 / 11:51 AM / 2 months ago

US STOCKS-Futures fall on concerns over U.S.-China trade fallout

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* Futures down: Dow 0.35%, S&P 0.37%, Nasdaq 0.49%

By Medha Singh

July 9 (Reuters) - U.S. stock futures fell on Tuesday as investors worried over a hit to earnings from the prolonged U.S.-China trade war and receding hopes of a sharp rate cut by the Federal Reserve later this month.

In the latest indication of the U.S.-China trade dispute hurting businesses, German chemicals giant BASF warned of a 30% fall in adjusted annual profit.

RBC Capital Markets downgrade of 3M Co to “sector perform” on macro pressures from China, auto and electronics added to the downbeat sentiment. The industrial conglomerate’s shares fell 1.3% in premarket trade.

China-exposed stocks slipped, with Boeing Co, the single largest U.S. exporter to China, dipping 0.2% ahead of release of its orders and deliveries for the second quarter. Caterpillar Inc fell 0.4%.

Chipmakers, including Micron Technology Inc, Broadcom Inc and Intel Corp and Nvidia Corp were down between 0.6% and 1%.

Stocks have retreated from their recent highs since a robust June jobs report on Friday tempered expectations of an aggressive 50 basis point rate cut by the Fed at its July policy meeting.

The market forecast a 75% chance of a 25-basis-point cut, and a 25% chance of a 50-basis-point cut a week ago, according to CME Group’s FedWatch tool. In premarket trade, the chances were 95% and 5%, respectively.

Focus this week will be on the Fed chief Jerome Powell’s remarks at his two-day testimony before the Congress, starting Wednesday. Also due on Wednesday is the central bank’s June policy meeting minutes.

At 7:09 a.m. ET, Dow e-minis were down 95 points, or 0.35%. S&P 500 e-minis were down 11 points, or 0.37% and Nasdaq 100 e-minis were down 38.5 points, or 0.49%.

Banking stocks will be watched on Tuesday as the Fed conducts a conference to discuss the effectiveness of its stress tests for large lenders, as the U.S. central bank considers changes to its critical post financial crisis tool.

PepsiCo Inc rose 1.1% after the beverage maker beat analysts’ estimates for quarterly revenue and profit, benefiting from demand for its sodas and Lays chips, as well as its sparkling waters.

Second-quarter earnings is expected to start in earnest next week with Citigroup kicking off results for big U.S. lenders on Monday and FANG-member Netflix Inc scheduled to report later in the week.

Profits at S&P 500 companies is expected to dip 0.1% from a year earlier, according to Refinitiv IBES data. (Reporting by Medha Singh in Bengaluru; Editing by Sriraj Kalluvila)

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