US index futures rise as inventors speculate on Fed rate hold

Madrid - US stock-index futures rose, signalling equities will rebound from Friday’s drop, as investors

speculated that mixed economic data will prompt the Federal Reserve to hold rates steady at this week’s meeting.

S&P 500 futures contracts expiring December climbed 0.5% to 2 143.25 at 10:15 in London. Equities pared a weekly gain on Friday as investors mulled the implications of economic indicators that pointed to uneven growth in the US, while sliding oil prices and a selloff in banks also contributing to losses.

Still, shares are trading at about 18.2 times estimated earnings, the highest since 2009.

Dow Jones Industrial Average futures contracts added 88 points, to 18 141 today.

"It’s becoming bad news is good news again as we had some weak economic numbers last week so the chances of a rate hike seem to be diminishing in September and they’ll probably push it out to December," said Kully Samra, a London-based client manager at Charles Schwab Corporation, which has $2.7trn in client assets.

"We continue to be positive on the US even if valuations are stretched because they can be stretched and remain stretched in a bull market; I don’t see it turning into a bear market. I see the recent mixed economic data as a soft patch, not a persisting trend."

Investors will look to data on housing starts in August for indication of the health of the recovery before the Fed announces its rate decision on Wednesday.

Reports last week offered contrasting evidence of the state of the economy: the cost of living rose more in August than projected, while consumer confidence this month held at the lowest level since April.

A gauge tracking the degree to which data miss or exceed economists’ estimates is near a two-month low.

Following last week’s releases, the odds for a September rate increase have fallen to 20% from 30% less than two weeks ago, with December the first month with more than even odds of a hike.

Economists surveyed by Bloomberg expect the Fed to keep rates unchanged, while strengthening guidance about its intentions to raise borrowing costs soon.

Among stocks moving in premarket New York trading, Freeport-McMoRan and Newmont Mining Corporation advanced at least 1.3% as commodity prices rebounded. General Motors Company added 1.5% after Morgan Stanley recommended buying the shares.

GoPro added 3.6% ahead of its analyst day today, when it’s expected to launch a new drone product. PayPal Holdings fell 1.2% in pre-market trading after Canaccord Genuity downgraded its recommendation to hold from buy.