U.S. stock index futures fell on Friday, weighed down by a far weaker-than-expected rate of growth in Chinese exports, but the S&P 500 was still on track to post its fifth straight week of gains.
Trade and new bank lending data in China suggested pro-growth policies have been slow to gain traction and more urgent action may be needed to stabilize the economy.
“The data was not bad, it was horrendous,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
“This Chinese data is probably going to stall the market for a while and we may have a problem getting back above 1,400,” on the S&P 500, he said.
The S&P 500 closed Thursday at its highest in more than three months and near four-year highs as investors continue to bet a soft global economy will trigger intervention from central banks including the Federal Reserve.
The recent rally was triggered by expectations the European Central Bank will soon act to lower yields in Spain and Italy as a way to stabilize the bloc’s economy. The drop in Chinese export growth was in part due to slow demand from Europe.
“China’s export problem is an external problem and it has to do with Europe,” said Mr. Mendelsohn. “After these numbers investors may want to see (stimulus) activity fairly quickly, especially from the ECB.”
S&P 500 futures fell 6.4 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 48 points, and Nasdaq 100 futures lost 8.75 points.
The expectation of central bank action may give support to equities as investors think twice about shorting the market on the possibility of any action over the weekend.