Some jitters after Spain signals move to strip Catalonia of independence
U.S. stock futures fell sharply on Thursday, as technology-related shares such as eBay Inc., Apple Inc. and Nvidia Inc. took a tumble while escalating tensions in Spain and concerns about Chinese growth added to investor worries.
What are stock-index futures doing?
Dow Jones Industrial Average futures sank 125 points, or 0.6%, to 22,988. Meanwhile, S&P 500 futures dropped 13.1 points, or 0.5%, to 2,547. The weakness was even more pronounced for Nasdaq-100 futures , which slumped 39.50 points, or 0.6%, to 6,080.
All three benchmarks closed at records on Wednesday (http://www.marketwatch.com/story/dow-industrials-on-track-to-stay-around-23000-milestone-2017-10-18). The Dow Jones Industrial Average climbed 160.16 points, or 0.7%, to 23,157.60, finishing above the 23,000 level for the first time. The S&P 500 index rose 1.9 points, or 0.1%, to 2,561.26, and the Nasdaq Composite edged up 0.56 point to 6,624.22.
See:Dow 23,000 marks fresh history for blue chips (http://www.marketwatch.com/story/dow-23000-marks-fresh-history-for-blue-chips-2017-10-17)
And check out:Dow's historic close above 23,000 belies a flicker of weakness (http://www.marketwatch.com/story/dows-historic-close-above-23000-belies-a-flicker-of-weakness-2017-10-18)
(http://www.marketwatch.com/story/dow-23000-marks-fresh-history-for-blue-chips-2017-10-17)What could drive markets?
Dow futures have been going back and forth over the 100-point-loss line, but they were jolted lower mid-morning on news of a worsening in the standoff between Spain and Catalonia.
The region's president, Carles Puigdemont, failed to meet a demand to give up the region's push for independence. The Madrid government responded by suggesting it will trigger the process for imposing central control (http://www.marketwatch.com/story/spain-to-trigger-direct-rule-of-catalonia-as-standoff-continues-2017-10-19) when it holds a special cabinet meeting on Saturday. A suspension of autonomy in Catalonia could potentially spur fresh protests and instability for one of the eurozone's biggest members.
As well, futures appeared rattled Thursday by news that growth in China slowed in the third quarter (http://www.marketwatch.com/story/china-gdp-growth-slows-in-third-quarter-2017-10-18). Stocks in Hong Kong dropped 1.9%, led by losses for property, banking and tech shares.
Technology shares were also set to drive the losses for U.S. stocks, with Ebay Inc.(EBAY) down more than 6% in premarket action after the online marketplace cut its annual profit outlook for the second straight quarter. (https://www.wsj.com/articles/ebay-shares-fall-on-lowered-profit-outlook-1508361244)
(https://www.wsj.com/articles/ebay-shares-fall-on-lowered-profit-outlook-1508361244)Earnings season is also a factor Thursday. Philip Morris International Inc.(PM) shares fell 1.3% ahead of the bell after adjusted earnings and sales fell short of expectations. Travelers Cos.(TRV) picked up 1.4% after quarterly earnings and revenue beat forecasts.
Verizon Communications Inc.'s (VZ) report is also due ahead of the market open. After the close, PayPal Holdings Inc.(PYPL) is scheduled to report.
(http://www.marketwatch.com/story/china-gdp-growth-slows-in-third-quarter-2017-10-18)Thursday also marks the anniversary of the 1987 stock-market crash, and some investors have voiced some concerns about how sharp stocks have run up since the November 2016 election, shaking off U.S. political and geopolitical and valuation concerns, among others. The Nasdaq Composite has rallied 23% so far this year.
Many believe stocks will continue to rise on hopes that the administration of U.S. President Donald Trump will get a tax deal done. U.S. Treasury Secretary Steven Mnuchin warned in a recent interview with Politico (http://www.marketwatch.com/story/mnuchin-has-an-important-warning-for-stock-market-investors-2017-10-18)that stocks could take a big hit if tax cuts aren't implemented soon.
What economic reports are due?: Weekly jobless claims and the Philly Fed survey are due at 8:30 a.m. Eastern Time, followed by leading economic indicators for September at 10 a.m.
There are no Fed speakers on the docket.
What are strategists saying?
"To me, it appears that the Catalan impasse has triggered a global selloff across the equity markets, because the Asian session was rather quiet. The selloff really picked up as European traders stepped in," said Ipek Ozkardeskaya, senior market analyst at LCG, in emailed comments. However, the "Catalan crisis may not dishearten the U.S. equity traders who seem to be on fire," she said.
"I think we're simply seeing a small pullback driven by profit-taking following what has been a very gradual but long run of record high days," said Craig Erlam, senior market analyst at Oanda, in emailed comments. "Expectations for earnings season seem quite high, so I don't currently expect too much downside to result from this, barring any unforeseen shocks."
Which stocks are Wall Street following?
On the heels of those losses for eBay, other technology shares were dragged lower in premarket trading, with Apple Inc.(AAPL) down 1.6%, Nvidia Corp.(NVDA) sliding 2.2% and Netflix Inc.(NFLX) down nearly 1.5%.
Alcoa Inc.(AA) shares slid 3% in premarket after an earnings miss (http://www.marketwatch.com/story/alcoa-misses-on-earnings-but-beats-on-revenue-2017-10-18).
United Continental Holdings Inc.(UAL) fell 3% in premarket. The airline reported an earnings beat (http://www.marketwatch.com/story/united-continental-earnings-beat-despite-weather-related-cancellations-2017-10-18) despite weather-related cancellations.
American Express Co.(AXP) shares fell 1.5% in premarket. The company topped Wall Street expectations (http://www.marketwatch.com/story/american-express-shares-wobble-after-hours-following-earnings-beat-2017-10-18) on earnings and raised its guidance, and said Stephen Squeri, the current vice-chairman, will become chief executive and chairman on Feb. 1 (http://www.marketwatch.com/story/american-express-says-stephen-squeri-to-become-ceo-chairman-2017-10-18).
What are other assets doing?
European stocks were lower, with Spain's IBEX 35 index losing as much as 1% as the Spain-Catalonia standoff continued.
In Asia , Hong Kong's Hang Seng Index closed down 1.9% and the Shanghai Composite lost 0.3%. Data showed growth slowed in China in the third quarter (http://www.marketwatch.com/story/china-gdp-growth-slows-in-third-quarter-2017-10-18).
Oil prices fell sharply. West Texas Intermediate crude dropped 68 cents, or 1.3%, to $51.58 a barrel, while Brent crude slid 59 cents, or 1%, to $57.56 a barrel.
Gold futures were rising , while the ICE U.S. Dollar Index was flat. The euro was trading higher against the dollar at $1.1825.
(END) Dow Jones Newswires
October 19, 2017 07:18 ET (11:18 GMT)