Sep 26, 2023: U.S. stock futures traded lower Tuesday, with the Federal Reserve’s indications of a tighter than expected monetary policy next year hitting sentiment.
By 06:35 ET (10:35 GMT), the Dow Futures contract was down 125 points, or 0.4%, S&P 500 Futures traded 20 points, or 0.4%, lower and Nasdaq 100 Futures dropped 70 points, or 0,5%.
Indices set for losing month on hawkish Fed
The main indices on Wall Street are still feeling the impact from last week’s surprisingly hawkish Federal Reserve meeting, with the policymakers signaling another rate increase this year and just two rate cuts next year, down from the four forecast at the June meeting.
Minneapolis Federal Reserve Bank President Neel Kashkari emphasized the point on Monday, stating that given the surprising resilience of the U.S. economy, the Fed probably needs to raise borrowing rates further and keep them high for some time to bring inflation back down to 2%.
On Monday, the benchmark S&P 500, tech-heavy Nasdaq Composite, and 30-stock Dow Jones Industrial Average climbed, snapping four-day losing streaks.
But all of the indices are still on course to finish September sharply in the red, with the tech-heavy Nasdaq Composite down 5.4% in September, heading for its worst month since December, while the S&P 500 and Dow Jones Industrial Average had lost 3.8% and 2.1%.
Moody’s warns about shutdown damage
Also weighing on sentiment is the uncertainty surrounding a potential federal government shutdown, an occurrence that would harm the country’s credit, rating agency Moody’s (NYSE:MCO) said on Monday.
This warning comes just a month after Fitch downgraded the U.S. by one notch on the back of a debt ceiling crisis, meaning Moody’s is the last of the major agencies to still maintain the U.S. with the premier triple ‘A’ rating.
The yield on 10-year Treasury notes rose as high as 4.566%, a 16-year peak, pushing the U.S. dollar to a 10-month peak.
Economic data due for release Tuesday include August new home sales and the September consumer confidence, which are both expected to show a small decrease from the prior months.
Source Courtesy: Investing.com