Dow Futures Slump More Than 200 Points As Investors Brace for More Fed Tightening

Dow Jones2022-09-19

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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Comments

  • superpopo
    2022-09-19
    superpopo
    Yeah
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    2022-09-19
    starry123
    K
  • SteadyDoesIt
    2022-09-19
    SteadyDoesIt
    [Gosh] 
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    2022-09-19
    T202311701
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  • Born to Thrive
    2022-09-19
    Born to Thrive
    Cash is king now, see USD rising! Meanwhile pls be careful with your investment. For those with high risk appetite can consider short but be careful of margin overnight. Invest or trade safely. [Cool] [Miser] 
  • BotakGuy
    2022-09-19
    BotakGuy
    The end. 
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