Wall street’s main indexes were set to open lower on Monday as hawkish comments from a U.S. Federal Reserve official over the weekend tempered hopes of the central bank toning down its aggressive monetary policy approach.
Federal Reserve Governor Christopher Waller, a voting member of the rate-setting committee this year, said on Sunday that markets should now pay attention to the “endpoint” of rate increases, not the pace of each move, and that the endpoint was likely “a ways off.”
The comments follow a softer-than-expected inflation report last week, which had buoyed hopes that price pressures were easing and the Fed could scale back its hefty interest rate hikes.
The data helped drive a euphoric market rally, with the S&P 500 logging its biggest weekly percentage gains in about five months, while the tech-heavy Nasdaq logged its best week since March.
In the week ahead, focus will be on a slew of economic data including retail sales numbers on Wednesday as well as speeches by several Fed officials for further clues on the outlook for interest rates.
“The market is expecting the Fed to continue its hawkish rhetoric on rates,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
“That could all change once we get more confirmation on inflation in December. Once they (Fed) raise rates at 50 (bps), there’s a possibility that they might indicate slower rates.”
Traders now expect the Fed to hike interest rates in December by a half point, and expect terminal rate in the range of 4.75%-5.0% next year.
As U.S. Treasury yields edged up, technology and growth names such as Meta Platforms Inc, Apple Inc, Amazon.com Inc slipped between 0.7% and 1.5% in premarket trade.
Tesla Inc fell 1.3% as Chief Executive Elon Musk said “I have too much work on my plate” when asked about his recent acquisition of Twitter and his leadership of the electric-vehicle maker.
Meanwhile, bitcoin and other cryptocurrencies remained under pressure, following last week’s collapse of crypto exchange FTX.
At 8:06 a.m. ET, Dow e-minis were down 50 points, or 0.15%, S&P 500 e-minis were down 11.5 points, or 0.29%, and Nasdaq 100 e-minis were down 62 points, or 0.52%.
U.S.-listed shares of Chinese firms such as Alibaba.com , JD.com and Pinduoduo gained between 2% and 6% following Beijing’s support measures to boost liquidity in the property sector and easing of some of its strict COVID-19 rules.
Chinese leader Xi Jinping and U.S. President Joe Biden met on Monday for long-awaited talks that come as relations between their countries are at their lowest in decades, marred by disagreements over a host of issues from Taiwan to trade.
Biogen Inc and Eli Lilly gained 5.4% and 2.0%, respectively, after their Swiss rival Roche’s Alzheimer’s disease drug candidate failed to meet the goal of long-awaited studies. (Reporting by Shubham Batra, Bansari Mayur Kamdar, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta)