World Economy

Futures Drop on Global Economy Concerns

Futures Drop on Global Economy ConcernsFutures Drop on Global Economy Concerns

US stock index futures dropped on Wednesday as selling resumed on worries over the health of the world economy, ahead of a slew of data and corporate earnings.

The benchmark S&P 500 had eked a tiny gain at the close a day earlier following three sessions of declines spurred by concern over the potential spread of Ebola, the impact of global economic weakness on US earnings and plunging oil prices.

The S&P has lost 6.6 percent since its Sept. 18 record closing high and is now up just 1.6 percent for the year, while the Dow  is down 1.6 percent since Dec. 31.

Futures were little changed earlier in the day before dropping steeply in heavy trading, reflecting a recent jump in volatility in the equity markets.

Aside from concerns about the global economy, Chicago-based AbbVie said it was reconsidering its $55 billion takeover of the company weeks after the US government moved to curb deals designed to reduce tax, throwing the vitality of merger and acquisition activity into doubt.

US-listed shares of Shire tumbled 25.9 percent to $182.24 before the opening bell while AbbVie shares declined 4.1 percent to $51.90.

“This is the bottom line, the market is technically broken, expect this volatility because technically it needs to build a base again, so any news that would not necessarily have affected it as much will now affect it more - it’s amplified,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.

At 8:30 a.m. EDT (1230 GMT), investors will digest a trio of economic reports, including the Empire State Manufacturing Survey for October, as well as retail sales and the producer price index for September.

Investors will also look to the latest earnings reports for signs of growth. Bank of America shares were up 0.7 percent to $16.64 in premarket after posting its third-quarter results.

Later in the session at 10:00 a.m. (1400 GMT), business inventories for August are due, while the Federal Reserve’s Beige Book on business activity across the nation is expected at 2:00 p.m.

S&P 500 companies are expected to show earnings growth of 6.4 percent in the third quarter, according to Thomson Reuters data, with revenue growth expected at 4 percent.

Ebola-related stocks were the most active in premarket trading, after the Texas Department of State Health Services said a second healthcare worker, who had treated the first patient to be diagnosed with Ebola in the United States, has tested positive for the disease.