U.S. Stock Futures Slump on Global Selloff

NEW YORK — U.S. stock futures slumped as part of another global selloff, with continued volatility in emerging-market stocks and currencies prompting investors to flee riskier assets.European markets also sank, with the Turkish lira slumping to another record low against the dollar. The Russian ruble also hit a record low against the euro. Brazil’s currency also fell in early trading.

The iShares MSCI Emerging Markets exchange-traded fund dropped 1.4% in premarket trading, after falling 2.5% on Thursday to close at a 4 1/2-month low.

About 90 minutes ahead of the open, Dow Jones Industrial Average futures slid 95 points, or 0.6%, to 16056. On Thursday, the Dow slumped 176 points, or 1.1%, to close at a one-month low, as disappointing data out of China sparked a selloff.

S&P 500 index futures dropped 12 points, or 0.7%, to 1812 and Nasdaq 100 futures shed 22 points, or 0.6%, to 3592. Changes in stock futures don’t always accurately predict stock moves after the opening bell.

U.S. Stock Futures Slump on Global SelloffAssets seen as safe havens continued to benefit. Gold futures gained 0.7% to $1,270.80 an ounce, extending Thursday’s rally to a two-month high. Treasury prices advanced further, with the yield on the 10-year Treasury note falling to 2.732%, after settling at seven-week low of 2.774% on Thursday. Treasury yields decline as prices rise.Joseph Quinlan, chief market strategist at U.S. Trust, Bank of America Private Wealth Management, with $333 billion in assets under management, said the volatility in the emerging markets is a worry for the U.S., as that total market segment accounts for a large chunk of global economic growth.

“They are big players, not bit players, so this is a big deal for everyone,” Mr. Quinlan said of economies dubbed emerging. “The rumblings in the emerging markets can create their own momentum. It’s a cascading effect.”

Although this volatility could remain a problem for the short term, he said longer-term investors shouldn’t be too concerned because the problems are coming from outside the U.S., which actually makes U.S. assets more attractive.

“We’re telling clients, this is a problem, but if there is a big sliver lining, it means more demand for the [U.S.] assets they already own,” Mr. Quinlan said. “If we got a 5% to 8% pullback, we’ll be putting more money to work in equities.”The S&P 500 closed Thursday 1.1% below its Jan. 15 record high close of 1848.38.

Worries about emerging markets overshadowed a 2.9% premarket jump in the shares of Dow component Microsoft Corp. The software giant reported late Thursday fiscal second-quarter earnings and revenue that exceeded expectations, boosted by strong demand for the company’s new Xbox videogame console.

Also in the Dow, Procter & Gamble tacked on 0.6% after fiscal second-quarter core earnings came in slightly above estimates, and the company said it was on track to meet its full-year earnings and revenue growth projections.

There were no major economic data scheduled for release in the U.S.

In Europe, the Stoxx Europe 600 dropped 1.5%, adding to Thursday’s 1% slid. Germany’s DAX 30 index lost 1.2%, France’s CAC 40 gave up 1.4% and the U.K.’s FTSE 100 dropped 0.9%.“The jury is still out on whether yesterday’s selloff was caused by U.S. data, poor corporate earnings or the Chinese purchasing managers’ index,” said Jim Reid, a strategist at Deutsche Bank. “Whatever the reason, the real damage was in done in emerging markets.”

“All this provides a fairly nervous lead-in to next week’s Federal Reserve meeting where the consensus appears to be that another $10 billion in tapering will result,” Mr. Reid said.

The Fed announced in December it would begin this month to taper what had been an $85-billion-a-month bond-buying program by $10 billion.

Asian markets got the selloff going again on Friday, highlighted by the 1.9% tumble in Japan’s Nikkei Stock Average. Hong Kong’s Hang Seng slumped 1.3%, while China’s Shanghai Composite bucked the trend by rising 0.6%.

– WALLSTREET JOURNAL

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