U.S. stock futures traded lower Monday, as investors braced for more Federal Reserve interest-rate tightening later this week.
What's happening
On Friday, the Dow Jones Industrial Average fell 256 points, or 0.83%, to 30,666, the S&P 500 declined 32.75 points, or 0.84%, to 3857.25, and the Nasdaq Composite dropped 105 points, or 0.88%, to 11,828.5.
The S&P 500, down four of the past five weeks, has dropped 19% this year.
What's driving markets
The market focus was firmly on the upcoming Federal Open Market Committee meeting, which is due to end Wednesday.
A rate hike of three-quarters of a point is expected, and attention will be put on the accompanying dot plot of rate porjections.
"The 2023 median, effectively communicating the Fed's terminal rate, may be 4.25-4.5%. Despite the dramatic upward revisions to policy rate projections, risks remain skewed to the upside: it is much easier to see scenarios where policy rates reach above 5% than where the cycle terminates below 4%," said economists at Citi led by Andrew Hollenhorst.
Andrew Sheets, chief cross-asset strategist at Morgan Stanley, said cash and short-term fixed income increasingly offer lower volatility and high yield. He points out the yield on U.S. 1-to-5 year credit of 4.9%, compares to the 5.9% earnings yield of the S&P 500, but the stock-market index has been 5.7 times more volatile over the last 30 days.
The cryptocurrency complex was getting hit particularly hard, with bitcoin trading below $19,000. Gold futures also fell, with the lead contract down about $12 per ounce.
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