Stock futures traded lower on Monday in a week expected to see the Federal Reserve raise interest rates by another three-quarters of a point in its bid to tame inflation.
Contracts connected with
Dow Jones Industrial Average
fell 201 points, or 0.7%, to 30,721;
Futures fell 0.7% and
Futures fell 0.9%.
Shares in Asia fell on Monday. of Hong Kong
fell more than 1%, resulting in Chinese stocks such as
(point: BABA) and
ended the session down 0.4%. European stocks also fell, with the London stock market closed for the funeral of Queen Elizabeth II.
U.S. stocks fell on Friday and markets slumped for the week after warmer-than-expected inflation data and an earnings warning from
(FDX) had investors worried about what the shipping giant’s warning might mean for the world’s largest economy.
The Dow fell 4.1% last week, the S&P fell 4.8% and the Nasdaq fell 5.5%. The three indices have closed four of the past five weeks with losses.
The timing of FedEx’s warning was not good, as investors were already nervous that another aggressive move by the Federal Reserve on interest rates could send the economy into recession. The central bank raised interest rates by 75 basis points at each of its last two policy meetings in June and July.
The Fed’s interest rate decision will be announced on Wednesday afternoon.
Citi economists expect the Fed to raise rates by 75 basis points, saying a 100 basis point hike was possible but not likely.
“A surprisingly large 100bp hike would be one way to send a strong, hawkish message, but we think most Fed officials will judge that the potential costs outweigh the benefits,” the economists said. “Financial conditions broadly tightened after last week’s inflation data, and there isn’t the same need to push back against easing conditions that the Fed faced as equity prices rallied over the summer.”
Consumer price data for August, released last week, showed prices rose at an annual rate of 8.3 percent, higher than the estimate for an 8 percent rise. This is a slowdown from July and the second month of declining inflation, although inflation is falling more slowly than expected.
Oil prices fell on Monday ahead of an expected tightening of monetary policy by the US Federal Reserve and
traded below $18,500 at levels last seen towards the end of 2020.
Write to Joe Woelfel at email@example.com