U.S. index futures climbed, following the S&P 500 Index’s first back-to-back declines in three weeks, indicating equities will linger in their recent range before housing data and as investors await a speech Friday from Federal Reserve Chair Janet Yellen.
S&P 500 contracts expiring in September added 0.3 percent to 2,187.75 at 9:13 a.m. in New York, extending gains after the European market open. Dow Jones Industrial Average futures advanced 58 points, or 0.3 percent, to 18,577, and those on the Nasdaq 100 Index also rose 0.3 percent.
“The earnings season is largely over and the only thing we can look at is Fed-speak which is antagonizing,” Brian Frank, portfolio manager at Key Biscayne, Florida-based Frank Capital Partners LLC, said by phone. “We’re in the most aggressive dip-buying market I’ve ever seen. I wouldn’t even call the last two days a dip, but any little tiny decline seems to be an excuse to buy and talk about the Fed.”
After a more than 9 percent rebound since June took the S&P 500 to 10 fresh records, the rally lost steam in recent days, with hawkish remarks from Federal Reserve officials indicating an interest-rate increase may come sooner than expected. Still, with recent economic data such as housing starts and industrial production beating forecasts, optimism may be slowly creeping back in.
The S&P 500 has barely moved in the past four sessions as investors assessed stretched valuations and signals from Fed policy makers, while the earnings season is winding down. Outside of a pop that took equities to the latest all-time high on Aug. 15, the benchmark index has wobbled around the 2,180 level for two weeks now. The measure trades at 18.6 times estimated earnings, at its highest levels since 2002, while the CBOE Volatility Index is near a two-year low.
Fed Chair Yellen will speak on Friday at the annual monetary policy symposium in Jackson Hole, Wyoming. In recent days, Fed Vice Chairman Stanley Fisher signaled that a 2016 rate hike is still under consideration, saying the U.S. economy is close to meeting the central bank’s goals. San Francisco Fed President John Williams said a hike in September is “in play,” while New York Fed President William Dudley warned that investors are underestimating the likelihood of a rate increase.
Traders are pricing in a 26 percent chance that the Fed will raise its benchmark rate in September. December is now the first month showing at least even odds of an increase, from June about two weeks ago.
HP Inc. and Tiffany & Co. are among the few remaining companies to report this week. Among S&P 500 members that have announced results so far, 79 percent have topped profit projections, while 56 percent beat sales estimates. Analysts predict net income fell 2.3 percent in the second quarter, and that it will slide 0.9 percent in the current period. That would mark a sixth consecutive quarterly drop, the longest since the financial crisis.
Best Buy Co. surged 15 percent in early New York trading as the nation’s largest electronics retailer reported profit that beat analyst projections. Monsanto Co. rose 4.1 percent after people familiar with the situation said deal negotiations with Bayer AG are advancing.