U.S. stock index futures fell on Thursday on growth and inflation fears and concern the Federal Reserve could begin to rein in its massive monetary stimulus. Many analysts expect the Fed to announce its plan to taper asset purchases as early as the Sept. 21-22 policy meeting.
Minutes released on Wednesday from the Fed’s meeting last month showed officials felt the employment benchmark for decreasing support for the economy “could be reached this year”, sending the S&P 500 sliding 1% in its worst day in a month.
Concerns about the sudden tapering at a time when macroeconomic data was signaling a slowdown in U.S. economic growth have knocked Wall Street’s main indexes off record highs this week.
CNBC:
Futures on the Dow Jones Industrial Average dropped around 295 points or 0.9%. The Dow tanked by 380 points on Wednesday for its worst performance in a month as meeting minutes from the Fed’s gathering in July showed the central bank has started eyeing tapering its $120 billion in monthly bond purchases before the year-end.
Goldman Sachs cut its economic growth forecast for the current quarter to 5.5% from 9% Wednesday night, adding to the negative sentiment. The firm also sees higher inflation than expected for the rest of the year.
The Philadelphia Fed Index, a gauge of growth in the region, still indicated expansion but at a level worse than expected. The August reading was 19.4, below the 22 consensus of economists polled by Dow Jones.
For the week through Wednesday, the Dow and S&P 500 are each down 1.5%. The Nasdaq Composite is lower by 2%.
MacDailyNews Take: Inflation is a bigger concern than many seem to realize currently.
It’s best to get a handle on inflation, if you know how, while you still can.
Inflation is repudiation. — Calvin Coolidge
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan