BLBG: U.S. Index Futures Pare Advance as Europe Stocks Decline Further
Contracts rallied after first of three presidential debates
S&P 500 on track for biggest monthly loss since January
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U.S. stock-index futures erased about three-quarters of a rally that followed the first presidential debate, as lingering concerns about the health of European banks weighed on sentiment.
S&P 500 Index contracts expiring in December rose 0.2 percent to 2,143.75 at 7:20 a.m. in New York, paring an advance of as much as 0.7 percent as European stocks reversed gains. Futures on the Dow Jones Industrial Average added 21 points to 18,035.
Europe’s bank woes are weighing on the U.S. market, with the KBW Bank Index tracking 24 lenders tumbling the most since July 5 on Monday. On Tuesday, Deutsche Bank AG fell 2.7 percent in Germany, extending a record low amid growing concerns that it’ll need to raise capital. Its U.S. shares also declined in early New York trading.
“Deutsche Bank is the eye of the storm because even if it’s listed in Germany, it’s a multinational bank with a big role in U.S. markets,” said Jasper Lawler, an analyst at CMC Markets in London. “Markets don’t have the impetus to go higher.”
The S&P 500 has lost 1.1 percent in September, heading for its biggest monthly decline since January. While it gained last week as the Federal Reserve kept its policy unchanged, it’s down 2 percent since an all-time high reached Aug. 15.
Sentiment turned early Tuesday, after U.S. index futures rallied overnight as much as 0.7 percent following the first of three presidential debates. While both Hillary Clinton and Donald Trump claimed victory, the market saw Clinton as the winner, with futures erasing a decline of as much as 0.3 percent. A win for the Democrat is what Wall Street expects and would create less headline risk for markets, while a Trump win would trigger a 5 percent selloff, Citigroup Inc. wrote in a note last month.
“Hillary came off better than Trump in the debate, but at the same time the consensus was that she would, and the consensus is that she wins these elections,” Lawler said. “Had Trump been stronger, then maybe we would have seen a stronger downside reaction in the market. Markets are still not fully discounting a Trump win, and this could shock markets.”
As the Nov. 8 election approaches, investors are also keeping an eye on economic data. Reports on the services industry and consumer confidence are due on Tuesday.
Among stocks moving in the premarket, Rice Energy Inc. fell 5.3 percent after the U.S. shale gas producer agreed to buy closely held Vantage Energy for about $2 billion. Kite Pharma Inc. rallied 12 percent as a successful interim analysis bolstered its chances to be the first to market an new treatment for lymphoma.
