U.S. stock-index futures tumble as China growth concern deepens

The slump that dragged the Standard & Poor’s 500 Index to its worst month since 2012 is set to worsen, U.S. futures indicate, amid continuing concerns about the impact of China’s slowdown on the global economy.

Contracts on the S&P 500 expiring in September slid 2.3 percent to 1,923.75 at 8:36 a.m. in New York. Futures on the Dow Jones Industrial Average retreated 378 points, or 2.3 percent, to 16,130 and those on the Nasdaq 100 Index lost 2.5 percent. Equities dropped in Asia, with the Shanghai Composite Index slumping as much as 4.8 percent, after manufacturing reports pointed to a deepening Chinese economic slowdown.

A handful of stocks that had driven much of the S&P 500’s 2015 gains before the August selloff were under pressure Tuesday. Facebook Inc., Amazon.com Inc., Apple Inc., Netflix Inc. and Google Inc. – which had come to be known as the Fab Five – were all down at least 2.3 percent. Chesapeake Energy Corp. and Marathon Oil Corp. lost more than 4.6 percent as crude slipped after its strongest three-day rally since 1990.

“Markets may have overemphasized China’s impact, but markets are also in relatively bad shape and we’re getting more negative technical signals,” said Otto Waser, chief investment officer at R&A Research & Asset Management AG in Zurich. “It’s a close call for the Fed and as long as markets are in turbulence, I don’t think it will raise rates. If the markets remain too turbulent, they will postpone to October.”

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Remarks by Federal Reserve Vice Chairman Stanley Fischer last week suggested the central bank hasn’t ruled out raising interest rates when the Federal Open Market Committee gathers on Sept. 16-17. That has heightened concerns that the Fed may increase rates even as growth slows around the world. Traders are now pricing in a 38 percent chance that it will act this month, up from 24 percent last Wednesday.

The S&P 500 ended down 6.3 percent in August as China’s currency devaluation spurred concern over global growth, erasing more than $5.7 trillion in equity market values worldwide.

That sparked a record jump in volatility, with the Chicago Board Options Exchange Volatility Index surging 135 percent. The S&P 500 plunged the most since 2011 and entered a correction last week, only to then rally more than 6 percent over two days. The U.S. benchmark index closed Monday 7.5 percent below its all-time high set in May.

Investors are watching economic data for clues on the likely trajectory of U.S. interest rates. Manufacturing growth slowed in August, according to forecasts compiled by Bloomberg before an Institute for Supply Management report at 10 a.m. Separate data may show construction spending accelerated in July. Monthly gauges yesterday on Midwest manufacturing slipped, while a measure of factory activity in Texas slid further into contraction amid the slump in the oil patch.

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