Futures extend slide on growth fears, government
shutdown threat
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[December 21, 2018]
By Medha Singh
(Reuters) - S&P 500 e-minis logged their
biggest losing streak in seven years on Friday, dropping about 0.6
percent on growing worries of slowing global growth and the threat of a
U.S. government shutdown.
The Federal Reserve's plan, announced Wednesday, to keep raising
interest rates was an added headache for investors already fearful that
trade wars and other geopolitical concerns would grind economic and
corporate growth to a halt.
The U.S. central bank's view that the economy is strong will be tested
amid a slew of economic data, including third-quarter GDP and November
consumer spending, the Fed's preferred measure of inflation.
Adding to the nerves was a chance that the government could be shut down
unless President Donald Trump and Congress cut a deal before midnight on
their long-running battle over funds for a Mexico border wall.
Volatility may rise again on Friday on account of "quadruple witching,"
as investors unwind interests in futures and options contracts prior to
expiration.
"The indices are headed for another volatile, negative session as
options expirations, turmoil in the White House and a renewed
possibility of a partial government shutdown continue to shatter the
nerves of investors," said Peter Cardillo, chief market economist at
Spartan Capital Securities in New York.
One silver lining was Nike Inc <NKE.N>, whose shares jumped 8.5 percent
in premarket trading after the company's quarterly results beat Wall
Street estimates on strength in North America.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York, U.S., December 18, 2018. REUTERS/Brendan McDermid
At 7:29 a.m. ET, S&P 500 e-minis <ESc1> were down 0.57 percent, falling for the
seventh session in a row, their longest losing streak since November 2011.
Dow e-minis <1YMc1> were down 0.46 percent and Nasdaq 100 e-minis <NQc1> were
down 0.73 percent.
The three main Wall Street indices are already in correction territory, having
fallen more than 10 percent from their record closing highs, and are closing in
on bear market territory, when a security closes 20 percent below a recent high.
While the Nasdaq came within a whisker of bear market territory on Thursday,
other segments of the market, including the Russell 2000 <.RUT> small-cap
benchmark and the Dow Jones Transport Average <.DJT> are already in bear market
territory.
Data is also expected to show U.S. third-quarter gross domestic product (GDP)
growth was 3.5 percent, in line with the prior quarter.
While consumer spending in November is likely to have slowed from the month
before, the core PCE index, the Fed's preferred inflation measure, is expected
to have edged higher.
Both reports are due at 8:30 a.m. ET, along with data showing durable goods
orders rebounded 1.6 percent in November, after a drop of 4.3 percent in the
previous month.
(Reporting by Medha Singh in Bengaluru; Editing by Shounak Dasgupta)
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