Good News Is Bad News For A Street Obsessed With Fed's First Move

Sloppiness for European and Asian shares could spread to U.S. equities, although the futures market bobbed between gains and losses in a follow-up to Wednesday's broad-based slide. The drivers? Quite the buffet: Chinese deflationary data, concerns about Japanese capital spending, Apple's product parade, and a looming interest rate change. On Wednesday, stock indexes declined after a solid job-openings report was seen opening the door to a September Fed rate hike after all. Yes, another case of "good" news was "bad" news for a rate-sensitive Wall Street. U.S. jobless benefits claims fell in an early Thursday report. Guess what? Stock futures held losses upon that report's release, likely seen as another excuse to greenlight the Fed. The CBOE Volatility Index (VIX) may be the most notable mover from Wednesday's action. It traded from down some 14% at one point to finish the day up 5%—quite a swing for the "fear gauge," charted below in figure 1. Volatility could remain on the move but volume could start to fade heading into the pre-Fed meeting weekend. Really, with that meeting so up in the air, traders could be feeling a bit vulnerable.

Economists are still split as to whether the central bank will start the tightening cycle in September or wait until its October or December meetings. Rate-hike jitters certainly grabbed hold after Wednesday's job market data. In response, traders in the Fed funds futures pushed up the perceived odds of a September hike to 25% from 20%. Not a super-higher number, but moving higher nonetheless. On the contrary, Goldman Sachs said in a note dated Sept. 9 that its analysts expect the Fed to start the hiking cycle at the December meeting.

And just like that, another emerging market newsmaker that could influence global markets. Brazil's bonds landed in junk ratings territory. Standard & Poor's cut Brazil's investment-grade credit rating to junk for the first time since 2008, warning that it could lower the grade again in the coming months. Fitch and Moody's still have Brazil at investment grade. Political uncertainty was one reason for S&P's decision. The impact? First, this tugs on overall market confidence. But it could specifically trigger a pension-fund outflow. The downgrade makes lower-rate paper unacceptable under many funds' rules.

shares fell nearly 2% Wednesday after its product parade failed to inspire investors. The tech giant unveiled a business-oriented iPad Pro, a new set of iPhones with so-called 3-D touch technology, and a new-look Apple TV. Note, will you, there's no shortage of analyst notes peppering the social universe and quite a few of them consider Apple—even a boring Apple—priced at a "bargain" after its recent slide. Separately, Apple said Thursday it will tap the euro-zone bond market to fund buybacks and dividends. AAPL shares are higher in early action Thursday. Good trading, JJ