Stock futures traded lower on Monday in a week in which the Federal Reserve is expected to raise interest rates by another quarter of a point in its bid to end inflation.
Contracts linked to the
Dow Jones industrial average
fell 201 points, or 0.7%, to 30,721,
futures were down 0.7% and
futures fell 0.9%.
Stocks in Asia fell on Monday. Hong Kong
a decrease of more than 1%, led lower by Chinese stocks, for example
(ticker: BABA) and
(JD). The IS
ended the session down 0.4%. Common European shares also traded lower, with the London Stock Exchange closed for Queen Elizabeth II’s funeral.
US 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 larger global economy.
The Dow fell 4.1% last week, the S&P fell 4.8%, and the Nasdaq fell 5.5%. All three indexes have finished with losses in four of the last five weeks.
The timing of FedEx’s warning was not great 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 decision on rates will be announced on Wednesday evening.
Citi economists expect the Fed to raise rates by 75 basis points, saying a 100 basis point hike was possible but unlikely.
“A big 100bp hike would be one way to send a strong, hawkish message, but we think most Fed officials will consider the potential costs to outweigh the benefits,” the economist said. “Financial conditions have tightened significantly following last week’s inflation data and there is less of a need to push against easing conditions that the Fed faced as equity prices rallied over the summer.”
Consumer price data for August, released last week, showed that prices rose at an annual rate of 8.3%, higher than the estimate for an 8% increase. That’s 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 the expected tightening of monetary policy from the Federal Reserve, and
trade below $18,500 to levels last seen towards the end of 2020.
Write to Joe Woelfel at email@example.com