Stock futures fell as Fed rate hopes diminished

Stock futures fell as Fed rate hopes diminished

Stock futures fell on Wall Street amid the best rally of the year as confidence faded that the Federal Reserve will not raise interest rates again this year.

Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) futures fell about 0.3%, on the verge of giving up a notable range of gains. Nasdaq 100 (^NDX) futures fell more than 0.2%

Signs of weakness in the US economy suggest that the Fed may ease its tightening campaign. But investors are reevaluating those hopes after Minneapolis Fed President Neel Kashkari said Monday that the central bank likely has more work to do to control inflation.

Read more: What a pause on federal interest rate hikes means for bank accounts, CDs, loans and credit cards

“There was a lot of euphoria at the end of last week because of the belief that the Fed was done, that the jobs market was slowing, and that the US economy was going to have a soft landing,” said Michael Hewson, chief market analyst at the Fed. CMC Markets UK told Reuters. “People are starting to become a little clearer. There’s a risk that the Fed might go higher again.”

Investors will hear hints about policymakers’ thinking when the Fed chairs speak in Kansas City and Dallas on Tuesday, and then when Chairman Jerome Powell takes office later in the week.

New Fed doubts cast a pall over the oil outlook, helping push WTI prices below $80 a barrel for the first time in more than two months despite the prospect of Saudi and Russian supply cuts. West Texas Intermediate crude futures (CL=F) and Brent crude futures (BZ=F) fell nearly 2%, to $79.30 and $83.52 per barrel, respectively.

Oil was also affected by trade data that showed the decline in China’s exports unexpectedly accelerating in October, a sign of weak external demand, while its imports rose. But there was a bright spot for the world’s second-largest economy as the International Monetary Fund updated its GDP growth forecasts for the country this year and next.

In corporate news, WeWork (WE) on Monday filed for bankruptcy after America’s most valuable startup faced expensive leases. Its shares have fallen by about 98% this year.

Meanwhile, earnings season continues with reports from Uber (UBER) and Rivian (RIVN) on the docket on Tuesday, ahead of closely watched Disney (DIS) results scheduled for Wednesday.

  • Stock futures lose ground as Fed rate hopes dwindle

    The rally in US stocks was about to run out of steam on Tuesday, as confidence that the Federal Reserve would hold off on raising interest rates began to seep through.

    Dow Jones Industrial Average (^DJI) futures fell 0.28%, or 94 points, while S&P 500 futures (^GSPC) fell 0.25%. Futures on the tech-heavy Nasdaq 100 (^NDX) fell 0.11%.

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