Stock futures on Wall Street slipped amid the year’s best rally as confidence fades that the Federal Reserve won’t hike interest rates again this year.
Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) futures were both down around 0.3%, poised to lose hold of a notable stretch of gains. Futures on the tech-heavy Nasdaq 100 (^NDX) fell over 0.2%
Signs of a weaker US economy suggested to the market that the Fed could ease up on its tightening campaign. But investors were reassessing those hopes after Minneapolis Fed President Neel Kashkari said on Monday the central bank likely has more work ahead of it to control inflation.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
“There was quite a bit of euphoria at the end of last week on the belief that the Fed is done, the jobs market is slowing, that the US economy is going to experience a soft landing,” said Michael Hewson, chief market analyst at CMC Markets UK, told Reuters. “People have started to become a bit more clear eyed. There is the risk that the Fed could rise again.”
Investors will listen out for hints to policymakers’ thinking when the heads of the Kansas City and Dallas Feds speak on Tuesday, an then when Chair Jerome Powell steps up later in the week.
The fresh Fed doubts clouded the outlook for oil, helping push WTI crude prices below $80 a barrel for the first time in over two months despite the prospect of Saudi and Russian supply cuts. West Texas Intermediate crude futures (CL=F) and Brent crude futures (BZ=F) both sank almost 2%, to $79.30 and $83.52 a barrel respectively.
Also dragging on oil was trade data showing China’s drop in exports unexpectedly accelerated in October, a sign of flagging overseas demand, while its imports rose. But there was a bright spot for the world’s second-biggest economy as the IMF upgraded its GDP growth forecasts for the country this year and next.
In corporate news, WeWork (WE) on Monday filed for bankruptcy after the once most valuable US startup grappled with expensive leases. Its shares have fallen about 98% this year.
Meanwhile, earnings season continues with reports from Uber (UBER) and Rivian (RIVN) on Tuesday’s docket, ahead of the closely watched Disney (DIS) results due Wednesday.
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