Stock Futures Slip as American Eagle Plunges
NEW YORK ( TheStreet) -- U.S. stock futures were slipping Tuesday as investors absorb data on the health of the economy and await a timeline for a slowdown in the Federal Reserve's bond-buying program.
Before the market open, the U.S. trade deficit was shown to have declined to $34.2 billion in June from an upwardly revised $44.1 billion in May, in a report published by the Census Bureau. Economists were expecting the trade deficit to shrink to $43.5 billion.
Futures for the S&P 500 were down 2.75 points, or 2.69 points below fair value, to 1,699.75. Futures for the Dow Jones Industrial Average were falling 30 points, or 26.13 points below fair value, to 15,524. Futures for the Nasdaq were down 2 points, or 3.39 points below fair value, to 3,134.
To illustrate investor caution about a market that has consistently hit new highs this year, Jonathan Krinsky, Miller Tabak's chief technical market analyst, says the New York Stock Exchange composite volume on Monday was running 22% below Friday's pace, which had already been 17% below Thursday's pace. That would put Monday's volume at around 2.3 billion shares, making it the slowest full-day volume since Dec. 28.
Investor wariness may combine with the vacation month of August to produce a market with little volatility.
American Eagle Outfitters
"On the whole, we would say the data continues to paint a picture of an economy that is exhibiting gradual and grudging improvements," Russ Koesterich, Blackrock's chief investment strategist in New York, said in a note. "That said, however, we believe investors are likely to witness more volatility when we get into the fall. In our view, September is likely to provide three challenges for equity markets."
He said that among those challenges is that September is a month when the calendar has "traditionally mattered" -- and it has historically been the worst month for stock prices. Second, he said he expects anxiety over the direction of monetary policy to rise in advance of the Fed's mid-September policy meeting. And third, Koesterich predicted that Europe will re-emerge as a source of volatility as investors focus their attention on next month's federal election in Germany.