By Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- U .S. stock futures were weak on
Tuesday, as investors remained risk averse and avoided momentum
stocks.
The Federal Open Market Committee's two-day policy meeting will
begin Tuesday and many fret the policy makers will take a hawkish
stand on interest rates.
Futures for the Dow Jones Industrial Average (DJZ4) fell 33
points to 16,910, while those for the S&P 500 index (SPZ4)
eased 3.8 points to 1,972.300. Futures for the Nasdaq-100 index
(NDZ4) fell 12 points to 4,013.50.
In economic news, producer prices were flat in August thanks to
falling gasoline and food costs in another sign of receding
inflationary pressure. It was the lowest reading in the producer
price index since December, the Labor Department reported.
Tech and small-cap stocks led a mostly losing day on Wall Street
on Monday, with the Nasdaq Composite (RIXF) dropping 1.07% as
investors turned risk-averse ahead of the Fed meeting. Analysts are
looking for a change in the Fed's language that could signal
sooner-than-expected rate hikes.
Alain Bokobza, global head of asset allocation at Societe
Generale, and his team advised investors to "switch out of
expensive, illiquid and over-owned assets," rotating out of
small-cap stocks and into large-cap equities in Europe and the U.S.
"As the Fed continues to normalize its monetary policy, small caps
are at risk of a large correction," he said. Read Need to Know: A
dearth of deep-value plays
Data compiled by Bloomberg News showed 47% of stocks in the
Nasdaq Composite are down at least 20% from their peak in the past
12 months, and more than 40% of Russell 2000 (RUT)members have
fallen by as much. Meanwhile, the S&P 500 index has logged 33
new closing highs this year, and fewer than 6% of companies have
entered what is considered bear-market territory, Bloomberg
reported Monday.
Stocks to watch: Majesco Entertainment Co. (COOL) fell 14% in
premarket after a similar drop late Monday when the video-game
maker posted a larger-than-expected third-quarter loss.
Tesla Motors Inc. (TSLA) rose modestly in premarket after
falling hard Monday on a Morgan Stanley note that said the
electric-car maker's stock is overvalued. But Trip Chowdhry at
Global Equities Research advised in a note Tuesday that investors
buy Tesla on weakness, as he reiterated an overweight rating and a
12-to-18-month price target of $385. (Read more about the day's
notable movers here:
http://www.marketwatch.com/story/adobe-factset-earnings-in-spotlight-2014-09-16.)
Other markets:Asian stocks largely fell. China's largest
wireless carrier China Mobile Ltd. tumbled 3.8% at the close, after
reports said the release date for iPhone 6 in mainland China is
still uncertain. Data out of China also showed that in August
foreign direct investment fell to a four-year low. This followed
weak factory data released over the weekend.
A disappointing German economic sentiment survey put pressure on
already weak European stocks . Worries about this week's Scottish
referendum continued to dull markets, also weighing some on U.S.
stock futures.
Among currencies, the Russian ruble (USDRUB) continued to fall
against the U.S. dollar, off another 1% as sanctions worries
weighed. Gold(GCZ4) edged up on the heels of Monday's first win in
five sessions.(RUT)
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