People walk through the Wall Street subway station near the New York Stock Exchange. (Photographer: Michael Nagle/Bloomberg)

U.S. Stock Futures Edge Higher as S&P 500 Verges on Bear Market

(Bloomberg) -- U.S. equity futures nudged up after a volatile start as investors assessed comments from President Donald Trump that he was confident in Treasury Secretary Steve Mnuchin and the American economy while the benchmark index sat at the edge of a bear market.

March contracts on the S&P 500 Index advanced 0.4 percent as of 9:48 a.m. in London, after swinging between a 1.1 percent decrease and a 0.5 percent rise. Futures on the Nasdaq 100 Index and the Dow Jones Industrial Average were also higher after fluctuating. The benchmark S&P gauge for American equities is only about 7 points from trading down 20 percent versus its Sept. 20 closing high. Major European equities markets were closed.

Trump’s expression of confidence in the Treasury secretary, Federal Reserve and economy on Tuesday hasn’t calmed markets, which were roiled after Bloomberg News reported that the president had discussed firing the central bank’s chairman over raising interest rates.

Trump called Mnuchin a “very talented guy, very smart person,” when he answered reporters’ questions at the White House after addressing U.S. armed forces members on Christmas Day. He also said that the central bank is “raising interest rates too fast” but he has “confidence” that the Fed will “get it pretty soon.” Mnuchin spoke by phone with Trump several times over the weekend and also after a brutal trading day on Christmas Eve, CNN reported, citing an unidentified source it said was close to the White House.

“Markets have pretty much made up their minds on how jumpy they want to be -- very,” said Steve Englander, head of global G-10 FX research and North America macro strategy for Standard Chartered Bank. “The question is what is the primary driver of the jumpiness -- economic concerns, Fed policy, Trump-Fed conflict, slowing of global growth? Nothing is particularly encouraging right now.”

U.S. Stock Futures Edge Higher as S&P 500 Verges on Bear Market

The U.S. stock market has been turbulent in a year of big reversals, with the Nasdaq Composite descending into a bear market last week and the nation’s S&P benchmark inching closer to ending the longest bull market ever recorded.

“It is very unusual that the bias among the market participants is to the downside during this time of the year, and there’s not a lot of time to fix that,” Walter “Bucky” Hellwig, a senior vice president at BB&T Wealth Management in Birmingham, Alabama, said by phone. “I am not a trader but I checked the futures three times on Sunday and am watching the futures on a Christmas evening as well -- when you get moves like this you just can’t ignore them.”

Bernd Berg, global macro and FX strategist at Woodman Asset Management isn’t optimistic. “We are in the middle of the worst storm in global financial markets since the 2008 crisis, with markets crashing from New York to Tokyo,” he said. “As global central banks are unlikely to come to the rescue this time around, the global market crash might continue well into next year.”

Elsewhere, Japan’s Topix index closed 1.1 percent higher after surging as much as 2 percent on Wednesday. This came after a 4.9 percent plunge on Christmas Day. The Nikkei 225 Stock Average, which entered a bear market yesterday, also had a choppy day but ultimately closed up 0.9 percent.

“As far as the futures are suggesting, the market is indecisive right now,” said Jingyi Pan, market strategist at IG Asia Pte. “The rather empty calendar and empty desks post-Christmas could mean that there may be little to arrest the fall should it unfold,” she said.

©2018 Bloomberg L.P.