Stock futures lower on global growth worries after IMF trims outlook

Traders work on the floor of the NYSE in New York
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 17, 2019. REUTERS/Brendan McDermid

January 22, 2019

By Shreyashi Sanyal

(Reuters) – U.S. stock index futures fell on Tuesday, as investors were hit by fears of global economic slowdown after the International Monetary Fund trimmed its growth forecasts in a week of heavy corporate earnings.

The gloomy IMF forecasts, released on Monday, predicted the global economy will grow at 3.5 percent in 2019 and 3.6 percent in 2020, down 0.2 and 0.1 percentage point respectively from last October’s forecasts.

The downgrades reflected weakness in Europe and were on the same day China released data that confirmed its slowest growth rate in 28 years, adding to fears of a global economic slowdown.

A survey by auditing and accounting giant PwC offered investors little hope after it showed 29 percent of nearly 1,400 CEOs believed global economic growth will decline over the next 12 months, the highest percentage since 2012.

At 7:19 a.m. ET, Dow e-minis <1YMc1> were down 145 points, or 0.59 percent. S&P 500 e-minis <ESc1> were down 17.75 points, or 0.66 percent and Nasdaq 100 e-minis <NQc1> were down 57.75 points, or 0.85 percent.

The bigger-than-expected slowdown in China stoked concerns about fuel demand, which contributed to a near 2 percent fall in oil prices and weighed on energy stocks. [O/R]

U.S.-listed Chinese stocks tumbled in premarket trading along with chip stocks, which get a large portion of their revenue from China. Advanced Micro Devices Inc <AMD.O> fell 1.4 percent, while Micron Technology Inc <MU.O> dropped 1.3 percent.

U.S. stocks are coming off their fourth straight weekly rise after a strong rally in January put the benchmark S&P 500 index on track for its best monthly gain since March 2016.

With earnings season moving into top gear, analysts have lowered their fourth-quarter earnings forecast for S&P 500 companies to 14.2 percent year-over-year growth from 20.1 percent estimated on Oct. 1, according to IBES data from Refinitiv.

Johnson & Johnson <JNJ.N> shares rose 1.2 percent after the healthcare giant reported fourth-quarter revenue above Wall Street estimates, helped by strong demand for its drugs to treat cancer and psoriasis.

Halliburton Co <HAL.N> fell 1.5 percent after the oilfield services provider reported flat growth in quarterly revenue. Its shares momentarily rose 0.6 percent after results before reversing course.

On the macro front, the National Association of Realtors is likely to report that U.S. existing home sales in December dropped to 5.24 million units from 5.32 million units in the previous month. Data expected at 10 a.m. ET (1500 GMT).

(Reporting by Shreyashi Sanyal and additional reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

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