By Devik Jain
(Reuters) – Wall Street’s main indexes were set to open lower on Friday, as concerns over a slowing economic recovery and the possible tapering of monetary stimulus put the Dow and the S&P 500 on course for their worst week since mid-June.
Oil majors Chevron Corp and Exxon Mobil Corp slipped 0.9% each, tracking steep losses in crude prices, while shares of major Wall Street banks dropped in premarket trading. [O/R]
The S&P 500 energy sector is down about 7.6% this week, the most among all the 11 major S&P sectors.
Travel-related stocks including cruiseliners,, dropped more than 1%, while airlines stocks fell as Asian countries announced more drastic curbs and longer lockdowns for citizens to fight a surge in infection caused by the highly infectious Delta variant of the coronavirus.
“The growing concerns of the weakening economy, the Fed tapering, and the Delta variant were at the front of traders’ minds and when you mix all of that together with the seasonally weak August and coming September period, it all added up to one of the worst weeks we’ve seen in a couple of months,” said Ryan Detrick, senior market strategist at LPL Financial.
Global equities took a backseat this week, with U.S. stocks slipping from record highs as downbeat economic data from China compounded concerns regarding the outlook for U.S. stimulus.
Minutes from the Federal Reserve’s last policy meeting showed officials largely expect to reduce the central bank’s emergency monthly purchases of $120 billion of Treasury bonds and mortgage-backed securities later this year, amid a recovery in the jobs market.
Focus is now on the Fed’s annual research conference in Jackson Hole, Wyoming, next week for any read about the central bank’s next steps.
“The market is so hypersensitive over tapering … the odds of more volatility around it are stronger, just because we’re so hyper focused on Fed policy right now,” Detrick said
At 8:23 a.m. ET, Dow e-minis were down 141 points, or 0.4%, S&P 500 e-minis were down 14.75 points, or 0.34%, and Nasdaq 100 e-minis were down 2 points, or 0.01%.
The CBOE Market Volatility Index, also known as Wall Street’s fear gauge, was trading near one-month highs.
For the week, the blue-chip Dow and the benchmark S&P 500 are down about 1.7% and 1.4% respectively, while the tech-heavy Nasdaq has fallen 1.9%, its worst since mid-May.
Deere & Co rose 1% after it beat Wall Street estimates for third-quarter revenue and lifted its full-year earnings forecast on strong demand for farm and construction equipment.
The Invesco Golden Dragon China ETF was set for its eighth straight weekly loss – its longest losing streak in a decade – on concerns over China’s widening crackdown on sectors ranging from technology to luxury goods makers. E-commerce giant Alibaba Holdings has lost about $76 billion of its market value in the past four days and is headed for its worst week ever.
(Reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Subhranshu Sahu and Maju Samuel)
