U.S. Stock Futures Gain After S&P 500 Dropped

 
U.S. stock futures rose, indicating the Standard & Poor’s 500 Index will rebound from its biggest loss since 2008, as investors awaited a Federal Reserve meeting.
Contracts on the S&P 500 expiring in September gained 1.1 percent to 1,123.6 at 7:53 a.m. in London after earlier falling as much as 3.2 percent. Dow Jones Industrial Average futures rose 99 points, or 0.9 percent, to 10,825.
U.S. stocks tumbled yesterday amid concern S&P’s downgrade of the nation’s credit rating may worsen an economic slowdown. All stocks in the S&P 500 retreated for the first time since at least 1996 as the index’s 10 main groups all tumbled more than 5.3 percent.
Fed policy makers are meeting today. By a 52 percent to 48 percent margin, respondents in a Bloomberg News survey said the central bank would ease policy this year through monetary tools or statement language. If the Federal Open Market Committee acts, 59 percent said it would communicate that the federal funds rate, balance sheet or both will remain especially stimulative for a longer period or more specific amount of time.
The FOMC plans to issue a statement at about 2:15 p.m. New York time.
Economic data today showed China’s inflation accelerated to the fastest pace in three years in July, limiting the scope for monetary easing as risks to the global economy mount.
U.S. Credit Rating
S&P lowered the U.S. long-term rating one level to AA+ after markets closed on Aug. 5, while keeping the outlook at “negative” as the company becomes less confident that Congress will end Bush-era tax cuts or tackle entitlements. S&P also said the U.S. rating may be reduced to AA within two years if spending reductions are lower than agreed to, interest rates rise or “new fiscal pressures” result in higher general government debt.
The S&P 500 is valued at 11.3 times estimated income, the lowest since March 2009, according to data compiled by Bloomberg. The price-earnings ratio reached as low as 9.52 in 2008. The S&P 500 has dropped 18 percent since April 29. The Russell 2000 Index of small companies slumped 8.9 percent yesterday, entering a so-called bear market, down 25 percent from its April 29 high.