By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Middle East tensions drive up oil, gold prices
NEW YORK (MarketWatch) -- U.S. stock futures declined on
Thursday, extending losses on Wall Street to four straight
sessions, as worries about slowing growth sent investors to
perceived haven assets such as gold and the yen.
A stronger-than-expected report on jobless claims did little to
alleviate concerns of a marked slowdown in the economy during the
first quarter.
Meanwhile, Middle East tensions, specifically airstrikes
launched by Saudi Arabia in Yemen
(http://www.marketwatch.com/story/iran-warns-saudi-airstrikes-in-yemen-will-escalate-tension-in-region-2015-03-26),
pushed up oil prices, adding to jitters.
The heaviest losses for futures fell on those for the Nasdaq-100
index (NQM5), down 49 points, or 1.4%, to 4,274.50. Futures for the
Dow Jones Industrial Average (YMM5) slid 135 points, or 0.8%, to
17,513, while those for the S&P 500 index (ESM5) dropped 13.55
points, or 0.6%, to 2,040.
Selling in tech and biotech stocks drove the losses on Wall
Street Wednesday. Small-cap stocks, which had been highfliers, also
took it on the chin, with the Russell 2000 (RUT) falling 2.34%, to
close at 1,233.86 Wednesday.
The S&P 500 (SPX) and Dow industrials (DJI) each logged the
worst losses in two weeks. The Nasdaq Composite (RIXF) finished
2.4% lower, and the iShares Nasdaq Biotechnology ETF (IBB) slid
4.1%.
Michael O'Rourke, chief market strategist at JonesTrading,
believes what's happening is the market is reassessing data and
starting to view previous tailwinds as headwinds.
"When one considers the trends behind the major top-down
elements that investors watch -- 1. fundamentals in the form of
earnings, 2. policy in the form of the Fed, and 3. economic data --
all three were previous tailwinds that appear to be transforming to
headwinds as of late," O'Rourke said in a note.
Others blamed the selloff on a number of factors: earnings
jitters, investors cashing in on recent run-ups for biotechs and
other stocks, and a drop in durable-goods orders that triggered
concerns about U.S. economic growth.
The Stoxx Europe 600 index slid 1.6% ion Thursday trade. The
Nikkei 225 index posted the biggest losses in two months, with a
1.4% decline.
Read: Stocks are overpriced, overleveraged, headed for trouble
(http://www.marketwatch.com/story/stocks-are-overpriced-overleveraged-headed-for-trouble-2015-03-25)
Middle East tension also added to the mix. Investors drove up
gold prices (GCM5), which pushed through the psychologically
important level of $1,200 an ounce, while oil prices (CLM5) surged
more than 2% as news of a coordinated strikes in Yemen by five Gulf
states and Egypt triggered worries about crude supply. The yen
(USDJPY), another perceived-safe-haven asset, also surged against
the dollar.
Read: Oil prices surge as Saudi strikes in Yemen trigger supply
worries
(http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)
(http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)
(http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)
(http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)In
economic news, the number of people who applied for weekly
unemployment benefits fell by more than expected, in a sign that
companies are keeping their workers despite what appears to be a
marked slowdown in first-quarter growth.
The Fed calendar is fuller. St. Louis Fed President James
Bullard, speaking in Frankfurt, said risks of keeping U.S. policy
of rates at zero too long could be "substantial."
"Now may be a good time to begin normalizing U.S. monetary
policy so that it is set appropriately for an improving economy
over the next two years," Bullard said in prepared remarks to the
OMFIF City Lecture in Frankfurt, The Wall Street Journal reported
(http://blogs.wsj.com/economics/2015/03/26/feds-bullard-risks-of-keeping-u-s-policy-rates-at-zero-too-long-may-be-substantial/?KEYWORDS=bullard).
Fed Vice Chair Stanley Fischer will speak in Frankfurt on the
U.S. nonbank financial sector at 6:30 a.m. Eastern. Atlanta Fed
President Dennis Lockhart, a voting member of the Fed, takes part
in an onstage discussion in Detroit about U.S. monetary policy and
economic outlook at 9 a.m. Eastern Time.
Stocks to watch: Shares of SanDisk Corp.(SNDK) plunged 14% in
premarket trading after the company cut its sales outlook
(http://www.marketwatch.com/story/sandisk-shares-sink-after-revenue-outlook-cut-2015-03-26).
Lululemon Athletica Inc.(LULU) fell 3% in premarket trading
after news of a disappointing outlook
(http://www.marketwatch.com/story/lululemon-gives-disappointing-outlook-shares-drop-2015-03-26).
GameStop Corp.(GME), Restoration Hardware Holdings Inc.(RH) and
ConAgra Foods Inc.(CAG) will report Thursday.
Red Hat Inc.(RHT) shares could add to a late rally Wednesday on
the heels of better-than-expected results
(http://www.marketwatch.com/story/red-hat-apollo-education-pvh-earnings-in-focus-2015-03-24).
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