Not even a rally in oil managed to lift U.S. futureshigher after a rout dragged the Standard & Poor’s 500 Index to the lowest in 22 months.
Contracts on the S&P 500 expiring in March fell 0.5 percent to 1,842 at 7:06 a.m. in New York, mirroring declines in European shareseven as oil rebounded from a three-day selloff. Futures on the Dow Jones Industrial Average lost 95 points, or 0.6 percent, to 15,896. Nasdaq 100 Index contracts also retreated 0.6 percent.
“Our clients are not buying the dip like they did before,” said Kully Samra, who manages U.K. clients for Charles Schwab Corp. in London. “Economic data has been mixed, corporate margins aren’t expanding and sales haven’t been great. The market is lacking catalysts, and buyers can’t be lured just on valuations anymore.”
ITC Holdings Corp. rallied 12 percent after Fortis Inc. said it will buy the company for the equivalent of $11.3 billion. Sears Holdings Corp. dropped 3.4 percent after fourth-quarter sales dropped and after the retailer announced plans to accelerate store closings.
Declines in banks and technology stocks have weighed on U.S. equities in the market’s latest two-day rout, the worst for the Nasdaq Composite Index since August. The gauge is approaching a bear market, down 18 percent since its record last July. The Nasdaq Internet Index has slumped 8.3 percent in the past two sessions, the heaviest selling since 2008.
Citigroup Inc., Bank of America Corp. and Morgan Stanley slumped more than 5 percent yesterday, while shares of Goldman Sachs Group Inc. fell to a 2013 low. A gauge of lenders on the S&P 500 has plunged 25 percent since a July peak to its lowest level since October 2013 as bearish sentiment intensified this month. More than half of the 17 member of the S&P 500 Banks Index have lost at least 20 percent just this year.
Amid growing concern over China, volatile oil prices, and the trajectory of U.S. interest rates, all 24 developed-market indexes tracked by Bloomberg worldwide are down in 2016. With the S&P 500 losing 9.3 percent, some strategists are losing their resolve in keeping bullish calls and have trimmed their year-end projections. The average estimate calls for the benchmark to end December at 2,168 -- a 17 percent rally from yesterday’s close, but a gain of just 6.1 percent for the year.
As global stocks near a bear market, volatility is on the rise: The Chicago Board Options Exchange Volatility Index has jumped 20 percent in three days to 26, the highest in more than two weeks. Investors have been on guard for any signs of weakness spilling over from China while scrutinizing mixed signals from economic reports and corporate earnings. Walt Disney Co. is among companies posting results today.
With the U.S. reporting season more than half way through, about 77 percent of S&P 500 members have so far topped profit estimates, while less than half have beaten sales projections. Analysts estimate earnings at companies in the gauge fell 4.5 percent in the fourth quarter, and will drop another 6.3 percent in the current period.