Boeing pulls Dow futures lower as investors worry about Fed’s trajectory.
U.S. stock futures signal a cautious session on Wall Street due to a slump in Boeing shares and uncertainty over Federal Reserve policy.
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S&P 500 futures ES00,
-0.18%
It fell 11 points, or 0.3%, to 4724.Dow Jones Industrial Average Futures YM00,
-0.46%
It fell 183 points, or 0.5%, to 37536.Nasdaq 100 futures NQ00,
-0.20%
16413, down 47 points (0.3%)
On Friday, the Dow Jones Industrial Average closed at 37,466, up 26 points (0.07%), the S&P 500 SPX closed at 4,697, up 9 points (0.18%), and the Nasdaq Composite COMP closed at 14,524, up 14 points (0.09%). .
What is driving the market
US stocks were scheduled to open quietly on Monday, with the Dow Jones Industrial Average under particular pressure from shares of Boeing BA.
It fell more than 8% in premarket action after some of its 737 Max 9 planes were grounded due to ruptured fuselage panels.
Sentiment was further dampened by China’s stock market plunge amid tighter regulations and lingering concerns about the health of the world’s second-largest economy. Hong Kong’s Hang Seng index fell 1.9% to its lowest since November 2022.
The new warning comes as stocks had just broken a nine-week streak of gains after benchmark bond yields rose above 4%, with equity investors taking profits as the market lowered expectations of a Federal Reserve interest rate cut.
Friday’s stronger-than-expected release on the U.S. labor market and weaker-than-expected survey results for the services sector outlined uncertainty about the trajectory of Fed policy.
Richard Hunter said, “Given the economic resilience and the fact that inflation is not yet over, the Federal Reserve is likely to keep interest rates on hold for some time, as opposed to cutting rates in early March.” Head of Markets at Interactive Investor
In fact, central bank officials have signaled in recent comments that they are trying to avoid getting markets too hopeful that borrowing costs will fall quickly this year.
In a speech on Saturday, Dallas Federal Reserve President Rory Logan said it was too early to discuss raising interest rates because inflation was still above the 2% target and “an early easing in financial conditions could lead to a recovery in demand.”
Her colleague, Atlanta Federal Reserve President Raphael Bostic, is scheduled to comment at 12 noon ET. And on Thursday, the December consumer price index is due to be released, with economists expecting annual inflation to rise 3.3% from 3.1% in November.
Otherwise, it’s a weak start to the week for economic data, with the New York Federal Reserve’s consumer expectations index released at 11 a.m. Monday and November consumer credit data at 3 p.m.
Prior to this, the 10-year Treasury bond yield BX:TMUBMUSD10Y,
The index, which fell below 3.8% just after Christmas, was trading at 4.049% on Monday as investors priced the odds of a rate cut of at least 25 basis points at the Federal Reserve’s March meeting rising to 62.8% from 88.5% a week ago.
Monetary policy will face a bit of competition for investor attention with big banks such as JPMorgan JPM on Friday when the fourth-quarter 2023 corporate earnings season opens.
Citigroup C,
wells Fargo WFC,
Leading the charge. Total earnings for the S&P 500 are expected to rise 1.3%, according to Factset.
