Stock Futures Slide Late Session as Oil and Rate Fears Mount
The fundamentals driving the major U.S. stock index futures lower late in the session on Thursday are the fear of higher oil prices and higher interest rates for longer than previous expected. The negative factors are adding up, casting a bearish pall on the market. They include Iran’s stronghold on the Strait of Hormuz, which is causing a major supply disruption in the area, and the U.S. government’s inability to escort ships through the area. Both factors are signaling a long-term war, which is contrary to what President Trump said earlier in the week.
September Now the Target for First Rate Cut
A prolonged move above $100 a barrel will be inflationary, slow global growth and likely alter central bank policy. Investors are starting to look at September for the first rate cut this year after Goldman Sachs changed their forecast to that month. U.S. stock market investors are liquidating positions because another delay by the Fed will increase risk for holders of higher-yielding assets like stocks.